FORTUNE -- How many enterprise file-sharing services whose names don't start and end with the word "Box" can the market support? Probably not as many as are currently out there.
The long-term future of Box, the high-flying enterprise file-sharing company that filed for a $250 million initial public offering in March, is no slam-dunk. But earlier-stage and less heavily financed startups may face an increasingly shaky future in light of the Los Altos, Calif.-based company's impending IPO. Why? Box and its consumer-centric peer, Dropbox, have established themselves as the dominant pure-play companies in the wider file-sharing and syncing space. Meanwhile, heavyweights like Google (GOOG) and Microsoft (MSFT) have developed their own solutions. Of the many smaller startups that remain, a handful are likely to be quickly snapped up by large enterprise companies that don't yet have a file-sharing solution, and an even tinier fraction will make it as niche players, catering to specific verticals like government organizations.
As for the others?
"A lot of these guys will run out of cash," says Jeetu Patel, general manager of EMC's (EMC) Syncplicity division, a Box-like service acquired by the data storage company in 2012. According to Patel, there were upwards of 40 players in the space a few years back, when EMC started shopping around. Fast-forward to today, and he estimates that number has doubled.
Case in point: A recent report from Forrester Research evaluates 16 of the "most significant solution providers" in the market, including smaller players like Accellion, Alfresco, Egnyte, and WatchDox. "But this market is evolving so rapidly that new vendors make claims on it every day," wrote the report's authors, Ted Schadler and Rob Koplowitz. Of course, that rapid proliferation of seemingly similar businesses has meant that not all of them are attracting as much funding -- or as many customers -- as an Andreessen Horowitz-backed player like Box. (Then again, they're also not bleeding as much cash as the soon-to-be-public startup, either.)
"Consolidation is inevitable," says Ryan Kalember, chief product officer of Palo Alto, Calif.-based WatchDox, which bills itself as a more secure provider of sync and sharing services.
Several larger tech companies have already placed their bets. EMC has Syncplicity, Citrix Systems (CTXS) bought another competitor called ShareFile, and earlier this year VMware (VMW) shelled out $1.54 billion for AirWatch, a mobile device management company that also offers syncing capabilities. More M&A activity is likely on the horizon: According to an industry source, traditional storage companies -- think Western Digital (WDC) and NetApp (NTAP) -- have been eyeing acquisitions in the file-sharing space. Such a move could also make sense for legacy enterprise software providers like Oracle (ORCL) or SAP (SAP); certainly, both companies can afford it. Cisco Systems (CSCO), which has been moving into software, could also be a potential acquirer in this space -- and interestingly, company CTO Padmasree Warrior recently joined Box's board of directors.
"The [upcoming] Box IPO has catalyzed interest in this space," says Brad Garlinghouse, CEO of file-sharing site Hightail. But it's not "winner takes all" quite yet. "There will be more and more specialization and differentiation," he says.
Every file-sharing CEO interviewed for this story -- along with the above, Fortune spoke to companies like Huddle and Egnyte -- said they've noticed a significant uptick in interest from potential acquirers in recent months. Not all of them will end up getting bought, of course. And some are convinced they will succeed as standalone companies, following in Box's footsteps.
"I really hope they can do a great IPO," says Vineet Jain, CEO of Egnyte. "If they do, they can increase our valuation. And if they mess it up, it just sours the market."
Every tech company needs to woo developers. But a coming IPO accelerates the case for Aaron Levie's file storage company.
FORTUNE -- Box most often gets compared to online storage competitor Dropbox. But increasingly, it seems the soon-to-be-public startup is following the path of enterprise tech heavyweight Microsoft (MSFT). Why? The answer has more to do with its ambitions to build out a developer ecosystem than its impending IPO.
Box's growth strategy, per MOREMichal Lev-Ram, writer - Mar 27, 2014 5:00 AM ET
The Cisco CTO explains why she's backing Aaron Levie's soon-to-IPO enterprise content management company.
FORTUNE -- Earlier this week, the file-sharing service Box announced that Cisco Systems (CSCO) CTO Padmasree Warrior will join its board of directors. The Los Altos, Calif.-based company, which recently raised $100 million in new funding at around a $2 billion valuation, is expected to make its public market debut in the coming months.
Snagging Warrior is a good MOREMichal Lev-Ram, writer - Mar 21, 2014 9:47 AM ET
The rules of business are changing.
By Aaron Levie
FORTUNE – The CEO of a large insurance provider had the misfortune of being seated next to me at a recent event. As the founder of an enterprise software company, naturally I pressed him on his business's information technology strategy. The conversation didn't last long. His organization lacked a technology agenda beyond using IT to keep the business running smoothly. Recent discussions with MOREFeb 27, 2014 11:50 AM ET
The two cloud storage startups can be easily confused.
FORTUNE -- Quick -- name a cloud-based, file-sharing provider that's expected to go public later this year and has the word "box" in its name. (Hint: there's more than one right answer.)
Whether you guessed Box or Dropbox, you're correct. That's because, on the surface, the two appear to be very similar companies, especially now that both startups are nearing their respective IPOs MOREMichal Lev-Ram, writer - Feb 24, 2014 1:06 PM ET
Ex-AOL and Yahoo exec Brad Garlinghouse gives his file-sharing service a makeover.
FORTUNE – What do you do with a nine-year-old file-sharing service that trails behind startups like Dropbox and Box? If you're Palo Alto-based YouSendIt CEO Brad Garlinghouse, you change the name, experience, and pricing. With "Hightail," Garlinghouse hopes to attract new users but also have a name hip enough to turn into a user catchphrase.
"We wanted to choose a MOREJP Mangalindan, Writer - Jul 10, 2013 2:12 PM ET
To achieve balance he tries to leave work by 2 A.M.
FORTUNE -- Fortune's Brainstorm Tech Conference (July 22-24 in Aspen, Colo.) regularly brings together the best and brightest minds in tech innovation. Each week, Fortune will turn the spotlight on a different conference attendee to offer his or her own personal insight into business, tech, and entrepreneurship. This week, we asked Box co-founder and CEO Aaron Levie to answer 10 MOREJun 27, 2013 2:26 PM ET
How brick and mortar stores are luring online shoppers offline; meet the youngest start-up entrepreneurs around.
Apple's iPad mini: The rumor mill kicks into high gear [FORTUNE]
Why would Apple make a device that Steve Jobs famously described as too small for "great apps ... unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one quarter of the present size"? To cut off the air supply of MOREJP Mangalindan, Writer - Jul 5, 2012 5:30 AM ET
A new crop of apps from Amazon, LinkedIn and Box.net are the latest to take advantage of HTML5. They also signal this young language already has business' blessing.
FORTUNE -- Something in the last 18 months kicked the HTML5 adoption machine into overdrive. Maybe it was tech giants Apple and Microsoft joining hands and dubbing it the future of the web. Maybe it was Google's launch of the Chrome Web Store, MOREJP Mangalindan, Writer - Aug 30, 2011 11:06 AM ET
Fortune's curated selection of the day's most newsworthy tech stories from all over the Web. Sign up to get the newsletter delivered to you every day.
* A beta version of iTunes Match became available last night, and while only developers can currently get at it, the limited software release sheds more light on what the service will be like once it officially rolls out this fall. For the $25 annual fee, music can MOREJP Mangalindan, Writer - Aug 30, 2011 4:28 AM ET
|Apple shares soar on increased buyback|
|Many low-wage workers not protected by minimum wage|
|Stocks: The win streak is over|
|HBO shows coming to Amazon ... not Netflix|
|Facebook profit triples on mobile growth|