Why iCloud won't send the competition to the ground

June 9, 2011: 12:29 PM ET

Will popular services like Dropbox and Box.net be rendered useless with the emergence of Apple's cloud-based services? Hardly, they say.

FORTUNE -- When Steve Jobs took the wraps off iCloud earlier this week, many cheered. Apple was finally charging into the cloud space with a service that could stand up to recent offerings from Google (GOOG) and Amazon (AMZN), providing storage of music, photos, videos, apps and other documents with quick and easy access via any Apple device.

On the flip side, the announcement left some wondering whether iCloud threatens current third-party offerings, particularly popular cloud-based storage and file-syncing services that offer similar features.

"Where's the fight?" says Drew Houston, CEO and co-founder of Dropbox, the popular file-syncing service that whizzed past the 25 million user milestone last April. "Steve Jobs is building this for the Apple (AAPL) world, but we're building this for everyone. It's really apples and oranges."

Houston brings up the example of his mom, who owns a Windows netbook and Android device. For people like her, who are outside Apple's closed ecosystem, iCloud won't cut it. And because iCloud is still in its infancy, Houston feels there are still questions surrounding how thoroughly users will be able to manage and sync up their iCloud data. Can you share your music with others with different Apple user IDs? Can you share a Word doc with another user a la Dropbox or Google Docs and work on the same file simultaneously?

"Dropbox works well across various platforms," Houston says. "Everyone will demand the same of Apple, and I just don't think they're going to get that."

Aaron Levie, CEO and co-founder of Box.net, the enterprise-focused content management service, welcomes Apple to the space but echoes Houston, saying that iCloud won't crush third-party operators like his own. (Most recently, the startup raised $48 million during a funding round that included investors like venture capital firm Andreessen Horowitz.)

"Steve Jobs is really selling this as a way to synchronize all the things that you're buying from him, and enterprises aren't really worried about that," he says.

If iCloud works as advertised, it'll be a boon for a good chunk of Apple device owners, but others may run up against the walls of Apple's so-called "walled garden" and quickly come to resent them.

Levie argues that many consumers and businesses don't think about buying the full vertical solution from a single company: meaning, many don't just go to, say, Microsoft (MSFT) exclusively to buy everything from their desktop, operating system, and peripherals like printers.

"The advantage for any startup in this space is that this is not an Apple-owned world, a Microsoft-owned world, or a Google-owned world," he says. "You want software and solutions that sit in between the various technologies that you're using, and I think that's a boon for any of the consumer players. It's absolutely a strategic advantage for all of the enterprise players, and we think it's really the winning strategy in this space: to be open, to be connected, to be agnostic."

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About This Author
JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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