Box

Time is running out for Box competitors

April 14, 2014: 2:37 PM ET

The clock is ticking for enterprise file-sharing companies after their brightest star, Box, filed for an IPO.

Box CEO Aaron Levie and Fortune senior writer Jessi Hempel at the 2014 SXSW festival in Austin, Texas in March 2014.

Box CEO Aaron Levie and Fortune senior writer Jessi Hempel at the 2014 SXSW festival in Austin, Texas in March 2014.

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.

MORE: Dropbox opens its next chapter, with 275 million users

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.

MORE: How to tell the difference between Box and Dropbox

"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."

  • Why Box needs developers. Now.

    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 MORE

    - Mar 27, 2014 5:00 AM ET
    Posted in: , ,
  • Cisco's Padmasree Warrior: Why I'm backing Box

    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 MORE

    - Mar 21, 2014 9:47 AM ET
  • Box CEO: How will your company compete in the information economy?

    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 MORE

    Feb 27, 2014 11:50 AM ET
  • Dropbox raises $350 million

    Dropbox has another $350 million in the bank, and more may be on the way.

    FORTUNE -- Last month, reports surfaced that Dropbox had raised $250 million from Blackrock (BLK) in its final round of private funding before embarking on its highly anticipated IPO. Follow-up articles noted the round could go up to $400 million, with contributions from existing investors T. Rowe Price and Fidelity.

    Now we have an SEC filing with some MORE

    - Feb 24, 2014 2:17 PM ET
  • How to tell the difference between Box and Dropbox

    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 MORE

    - Feb 24, 2014 1:06 PM ET
  • Dropbox hires first COO amid Google divestiture

    Dropbox grabs Google's Motorola Mobility boss, Dennis Woodside.

    FORTUNE -- Dennis Woodside ran Motorola Mobility for Google, but apparently he won't be doing the same for Lenovo.

    Just weeks after Google (GOOG) agreed to sell the money-losing unit for $2.9 billion, Woodside has agreed to join storage company Dropbox as its chief operating officer.

    Dropbox has raised $507 million in venture capital funding. Its most recent deal, a $250 $350 million Series C round that valued MORE

    - Feb 13, 2014 10:24 AM ET
  • 9 tech startup CEOs on the best and worst of 2013

    From Box's Aaron Levie to Lookout's John Hering, these startup CEOs review the year in tech.

    FORTUNE -- If Silicon Valley is known for anything, it's breakneck innovation, consequences often be damned. Startups debut promising ideas -- or execute an already existing idea better. Today's scrappy poster child becomes tomorrow's old establishment. And one product launch is enough to ignite a new software or hardware category.

    The last 12 months have proven MORE

    - Dec 26, 2013 8:07 AM ET
  • Hightail, formerly YouSendIt, raised $34 million. Here's why

    We sit down with chief executive (and one-time "Peanut Butter Manifesto" author) Brad Garlinghouse.

    FORTUNE—Hightail, the file-sharing company formerly known as YouSendIt, has raised $34 million in new funding. The nine-year-old startup has been around much longer than newer entrants like Dropbox or Box, but recently it sought to revamp its image and differentiate its product features in order to stand out in an increasingly competitive market in which larger companies MORE

    - Nov 19, 2013 11:59 AM ET
  • Making enterprise file sharing more like personal sharing

    File-sharing company Egnyte wants businesses worried about data security to embrace the cloud.

    FORTUNE -- From college students distributing documents for a class to CEOs working on their Powerpoint presentations on the train, most people are familiar with and depend on cloud storage to make file sharing a breeze. While brands like Dropbox and Box have become household names for cloud storage, a new company is trying to take secure cloud MORE

    - Sep 30, 2013 12:08 PM ET
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.