Bearing Down on Data Upstarts

Description:  Nothing concentrates minds at a tech start-up like living in the middle of a price war between Amazon and Google. Just ask executives at companies like Box, Dropbox and Hightail

Source: NYTIMES.com

Date: Aug 24, 2014

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“These guys will drive prices to zero,” said Aaron Levie, co-founder and chief executive of Box. “You do not want to wait for Google or Amazon to keep cutting prices on you. ‘Free’ is not a business model.”

So how do you avoid free? Box is trying to cater to special data storage needs, like digital versions of X-rays for health care companies and other tasks specific to different kinds of customers. Hightail is trying to do something similar for customers like law firms. And Dropbox? It is trying to make sure that its consumer-minded service stays easier to use than what the big guys provide. READ REST OF STORY 

Questions for discussion:

  1. Using Porter’s model for competitive advantage, how do you feel that someone like “Dropbox” will compete in this changing industry? Explain which generic strategy they will pursue.
  2. Do you feel the larger companies like Google or Amazon will drive these smaller one out of business? Why or  Why Not?
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53 thoughts on “Bearing Down on Data Upstarts

  1. Luc Nguyen

    I do feel like larger companies such as Google and Amazon will drive out smaller businesses because of the magnitude of these larger companies. Even though these smaller companies may offer things such as unlimited data storage, or specialize in certain sectors such as health. Who say that these bigger companies can’t do the same? Businesses are in business to create margins that will create profits. If these larger corporations see that smaller companies are generating a profit in certain sectors they may want to pursue that same market. The only obstacle really in the way of a corporation eliminating their competition is the “differentiation advantage”. For these smaller companies to compete with these larger companies they need to make themselves different by offering services or products that are exclusive to themselves. Most of these larger companies have the ability to cover large overhead costs and generally have more capital than these smaller companies. Thus the cost advantage should be something that the smaller companies should avoid because they can easily be defeated in that area. In my opinion the best strategy for the smaller companies to have a competitive advantage is to explore areas not touched by Google, or Amazon. With the “differentiation advantage” a company can maybe create a internal data system that organizes the information in a certain way that may be different than Google or Amazon. The smaller companies can create a sorting system which will systematically organize the data received online in chronological order from most recent to old (examples such as studies and articles written in 2014 to old ones in 2006); have the system organize the information in sub categories based on content (have the content scanned, and organized into sub categories and then organized by relevance), and a system that will create it easy for the user to simply look up terms and have the system sort through all the sub categories and dates to make a new folder containing everything that the user is looking for (make the sorting and locating of files user friendly). I am not entirely sure if Google or Amazon has these capabilities but I know when I search for stuff on Google it would reference me to a huge variety of things. By having a system that is more accurate and content that is desired I believe would be beneficial for the smaller companies. And if they have subscriptions for consumers why not organize the data that the consumer stores, that way it makes it user friendly for the subscriber.

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  2. Mark H

    ‘Drop Box’ is considered a smaller company when being compared with Amazon and/or Google. It would be a tough feat for smaller organizations to compete with large organizations when the large organizations offer better prices for storage and can hold more storage. Amazon and Google are two well known name brands and are both considered reliable web sites. With the large companies already having a solid reputation, the smaller companies like ‘Drop Box’ will be out of business sooner then later. If companies like ‘Drop Box’ want to succeed in the Document storage business, they will have to sacrifice giving a next to nothing price to get people to make the switch over. In addition to cheaper prices, smaller companies will have to build loyalty with their customers providing them with security when storing documents. Online storage business is a tough market to succeed in. You need to find something different about your own company or you will be swallowed by the large companies like Amazon and Google.

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  3. Jaeger Mickla-Balan

    I personally am a little bias when it comes to this subject because I have Dropbox and Google. I think that both work perfect, but dropbox has some features that do not appeal to me, that is why I chose Google to be my main system for my files and emails. They both have a lot of storage, and great features, but Google can combine all those things like files, games, music, and emails on to one page for me and Dropbox cannot really do that. I think Dropbox will be eliminated from the competition unless it can come out with a new feature that they do better than Google and Amazon.

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  4. Danielle Gibson

    When viewed through the framework of Porter’s Five Forces Model, the data upstarts discussed in the article are at a significant disadvantage. The bargaining power of buyers is high, given that they have their choice of online data storage options from a number of smaller data upstarts, or from larger, more recognizable names like Google and Amazon. This is a negative for Dropbox, unless they choose a focus strategy to target customers whose needs are more specific.
    The treat of substitute products or services exists in the form of older, secondary storage devices, such as flash drives, solid state drives, optical discs, or magnetic discs. This would be a negative for Dropbox. However, they could combat this if their technology is able to overcome the limitations of secondary storage devices. For example, if a large amount of data must be stored, the cost of using Dropbox would be much less than the cost using most secondary storage devices.
    The threat of new entrants is high, as the only barrier to entry is having the capacity to store large amounts of data, and the programming capability to manage it. This is another negative for companies like Dropbox. Similarly, rivalry among existing competitors is strong, especially when the existing competitors are online behemoths like Google and Amazon, who can compete on a low-cost front. Supplier power, however, appears to be low because, as mentioned before, there is very little needed aside from data storage capability and programmers.
    The best strategy for a company like Dropbox is to try to differentiate themselves from their competitors through unique services, and to target specific customers based on those unique offerings.

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  5. Michelle McCaffrey

    I think it is very hard to be in the online storage business when you have such big competitors like Google and amazon. Dropbox has a lot of big industry rivalries that are able to provide the services they have for a lot lower price. Big name companies have a lot of revenue from other products and services they are able to give their customers the storage option for free or at a low price. I think a lot of people would switch from a company like Dropbox to Google because they are familiar with the brand Google they would be more comfortable using their services rather than Dropbox. They have a lot of threat of new entrants into the storage business with bigger names and lower prices so I think they have a chance of being driven out of business by the bigger named companies. If a customer is already using Google or Amazon services they would probably pick google or amazon over Dropbox because of them being familiar with that name. I think big companies like Google and amazon have the benefit of being big names it is easier to attract customers to the their company with the same service as DropBox.

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  6. Karmen

    This was a very interesting article. It talks about the fight for some of the smaller online businesses to keep in business and the techniques they are using. While Amazon and Google continue to grow and attempt to make their services better maybe even with the direct intent to put the smaller businesses out of business. Keeping in mind the question of “Do [I] feel the larger companies like Google or Amazon will drive these smaller ones out of business” and include a reason; I keep thinking of things like gas stations. I definitely feel like there is potential for Google or Amazon to put the smaller ones out of the game but I do not believe they will be able to cut out and keep out all smaller businesses. You commonly see gas stations playing the same game. One will raise or lower the price of gas or bring in another service and the rest will follow with some fighting back by going the opposite direction or bringing a different service. Sometimes a gas station folds but some hold on. This is exactly what is going on here. The smaller ones in this case are bringing in or specializing in certain services and playing with prices and the bigger ones are following suit, etc. Therefore, although I feel there is definitely a possibility that some of the smaller businesses will go out of business I do not believe that Google and Amazon will completely monopolize this business at least not for many years to come.

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  7. Curtis

    I believe that power house companies such as Google and Amazon will continue to drive smaller companies under the table in the online industry. Even if Dropbox was able to create the most efficient and effective way to have online data stored, it is only a matter of time before the big companies either buy them out for a large sum of money, or replicate their product for a cheaper price. Dropbox may be able to stay in business for a longer period of time if they specialize in medical record storage or other specific targets. With the amount of money and resources Google and Amazon have, there is no system that Dropbox can create that can not be replicated by the online power houses. Google and amazon may even increase re search and demand in this online storage industry and begin to make a cheaper better product then Dropbox is able too. There is nothing holding Google back from branching into the specific storage industry for medical records for the government as well. The government is just like any other buyer in the fact they want to save money and cut costs where ever it can. With Canada’s public health care system the market population possibility is massive. Combined the power and wealth of Google and Amazon Dropbox will not be able to compete in the long run. Dropbox can still make profit and be successful with specified storage strategies, but it’s eventual fall upon the feet of Google and Amazon is inevitable. Google and Amazon may even be considered monopolies of the online world.

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  8. McKenna

    Based on Porter’s Five Forces model, Dropbox wil not compete terribly, but they do not have a great competitive advantage either. As with most internet technology companies, there is a high threat of substitutes as people do not often trust the internet, or they have other forms of online storage such as Facebook. Some people will revert to storing things in physical files or photo albums. Some people believe that sites like Facebook or Instagram are all they need to hold on to photos. Some use external hardrives as storage as they believe the internet is not safe enough for certain information to be stored. Some trust their internal hardrives enough not to crash and use that for storage. There are many substitutes for storage.

    There is a large amount of buyer power in this industry, as there are many options, most of which are free. As in the article, there needs to be something more than just simple storage for these companies to charge a fee otherwise they will not last. So, if Dropbox charges $20 a month, and Google Drive is free, Dropbox doesn’t stand a chance.

    The threat of new entrants is not necessarily high, but it is not low eather. The average person would need quite a bit of money to purchase a program that allows them to create their own storage website. Then they would need money to advertise worldwide. If you get someone or some company who is well versed in technology enough so that they are able to design a storage website all on their own with their own systems, chances are that is not the first time they have created technology so they probably have the means as well as the knowledge of how to advertise their site.

    Supplier power is almost non-existent in this industry, as the only thing needing to be supplied is money. Since most companies in this industry are already quite large, they already have the money to create and run a storage site. In this example, the suppliers are the investors, which if you are not a well-known company, can be difficult to get. The suppliers do have some power though since they can sell their stocks and buy stocks from companies like Google. So, it is a slight threat since Dropbox is not as huge as some other companies.

    Rivalry among competitors seems to be quite huge in this industry. We hear all the time about technology companies stealing ideas or bashing other companies. As for online storage, there doesn’t seem to be quite as much rivalry but it is still high as a huge component is innovative ideas.

    I believe that Google and Amazon will drive out companies that do not have a unique competitive advantage as they are very user-friendly and they are free. The ones that will not be driven out will be the ones like Box and Hightail as they are creating storage solutions specific and customized to certain industries. Dropbox will be driven out as user-friendly is not a competitive advantage as being user-friendly is something many storage sites have in common.

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  9. Tim MacDonald

    I think drop-box and similar companies could compete in a niche market, drop-box is currently doing well in the student market, I have used them for group projects and have found them to be nothing but helpful amazing group study tools. It allows everyone to work on the same document at the same time while being in completely different places. With how they are now they can’t compete with google and amazon. They will need to revamp completely to get a big part of the market share. They will need to expand to keep up with the growing industry and they can’t keep up. I feel like if they don’t do something quick it might jeopardize their chances and they might be put out of business, they need to market themselves so they are different and they continue to still have a market segment. They all basically do the same thing they just have to find something different to differentiate them from the competition. The idea of cloud is a great idea and was definitely a game changer and is starting to make things such as email decline in the marketplace, although many still use and will continue to use email in the future, the question is will cloud be a faze like myspace or msn messenger o will it stick around and seem to stick popular like facebook has taken over as the powerhouse in the multimedia market segments. Only time will tell and the idea of placing things over the internet so specific people can see and share with each other s definitely the future of sharing.

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    1. Brett B

      With Porter’s model for competitive advantage in mind, I feel that smaller companies like Dropbox are going to have to compete in this industry by having a differentiation focus. These small companies know they cannot compete with the ever-decreasing prices of Google and Amazon when it comes to data storage. Because of this knowledge they have focused on one smaller part within the industry. Dropbox for example focuses on making sure that its consumer minded service stays easier to use than what the big guys provide. Small companies also have to have Focus. They have to be the best in a particular segment in the industry. Google says they are starting to focus on these smaller segments and if companies like Dropbox want to survive they need to already be established as the best in the segment.

      I feel the bigger companies always have the opportunity to drive the smaller ones out of business. After all they usually are more profitable, which allows them to spend the money needed to become more efficient at what the other companies are doing. However, it always depends on the focus of the company, if they only want to compete in data storage then they will try to be as efficient as they can in that segment but, if they decide to expand that focus they have the ability to do so. As we have seen in the past, large companies like Microsoft have always either, bought out the competition or made their products basically free so the other company cannot survive. The small companies have to be great at what they do or the big guys will diminish them.

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  10. Jennifer Jenkins

    With companies like Google or Amazon currently dominating the internet, they possess large amounts of power in what people view. Small companies are faced with competing with these companies and it proves an unfair playing field with these corporations. With so much power, it is easy for these large corporations to simply view the ideas of these small companies and not only take their ideas but make them better and already have a consumer base ready. These customers are already familiar with the names of Google or Amazon so they are not going to go look elsewhere for a product when these big names are offering the same services. It is easy for these large companies to compete with the small companies, with such a large following, people know and trust the names. They can easily offer the same product for cheaper. These corporations have to funds to always buy out the smaller companies if they end up facing difficulties in competing. To me it seems that these large corporations hold too much power on this playing field and it seems as though these small companies do not hold enough influence to sway people away from the big names that they already know. These small companies may be able to offer services that have consumer need, but their servers are not as powerful as the larger corporations, nor do they have the same kind of following. It just seems as though there isn’t really a question of competition, but more so how long can these small companies stay in the game before losing power and a following.

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    1. Hannah

      Google, Amazon and Apple are the big players in this industry. It is absolutely possible for these giants to drive other companies out of business, especially if they are offering comparable products. With the smaller companies trying to differentiate themselves from the larger companies, they have a fighting chance to be different. This is done by trying to narrow your consumer market, and the big three have the monopoly on the general public. Companies like Box that are trying to target the niche market that is smaller and still very important like healthcare, they really could dominate that specific market and come out on top. With the aggressive competition that is ongoing between companies, the consumer is the one that actually benefits. Just like in Porter’s model, supplier power is the only one that is going in the consumer’s favour. The competition is driving down prices, and widening the choices available for customers. That being said, the endless variety of options creates a dilemma for customers in the act of choosing. The battlefield between companies in this industry also makes it quite easy for customers to switch back and forth between services, so loyalty of customers is lost to a certain extent. It is likely easier for firms to establish loyal customers through establishing their niche target market, because companies have a much better chance of dominating that smaller market. Going after the ambiguous market of “everybody” poses such a huge challenge to smaller companies, and it likely will just be a continuing price war.

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  11. Sydney

    I believe it would be very hard for Dropbox to compete in this changing industry. Not because they don’t have a good idea/ product, but simply because big companies have an advantage over them before they even enter the market. I can say this from experience because I personally have Dropbox and haven’t touched it in two years, but I did just spend twenty-something dollars on more ICloud storage around a month ago. Why is this? I think it is because of convenience. Since I have an IPhone, IPad, and a MacBook; when I ran out of ICloud storage I got a notification on my phone once a week telling me I needed to buy more until I did. Not only was it annoying to get that notification every week, but once I finally swiped across (six weeks later) all I had to do was enter my apple ID and thirty seconds later I had more storage… easy as that. It’s not that I don’t think Dropbox isn’t a good product; it was just more convenient for me to do what my phone had been asking me to do for the last six weeks.

    I do believe that someone like Dropbox could potentially compete in this industry, but they would need to come up with something more unique than the big companies cheaper alternatives and of course, find a way to patent their idea/ niche so the big companies couldn’t copy. Perhaps with a particular business that needs more storage and security than a student like myself. Or else I do think that larger companies will drive the smaller ones out of business. Simply because they already have consumers trust, and can afford to be a lot cheaper than the smaller companies.

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  12. Taylor Grantham

    The basic concept of this article is striking to me, because although its basic premises analyses the issues of start up IT companions and their trials to compete with industry powerhouses such as Amazon and Google I feel like this concept can be applied to all different sorts of business, whether it is a small café, record shop or data storage company, the message is the same. Free is not a business model, but McDonalds will always make cheaper sandwiches, ITunes will always sell cheaper songs, and Google Drive is free storage software for the world to use. The fact of the matter is companies of this scale can afford to cut profits, and squish start-ups because they have such a strong and well-developed customer base. Interesting to me though is the idea brought up by Levie in the article saying that in order to compete in this market they must specialize instead focusing on charging for additional services, and targeting specialize business markets for data storage such as the health care system. In this way I agree with the analyst that states there is room for all companies, as I feel companies like Box and Hightail find their niche in specialization and quality service, as opposed to free and easy. The same concept can be applied to any business fighting a losing battle upon start up against an industry giant. To me the key to succeeding in a over supplied market is not providing a quality product at a quality price, because in order to remain competitive one would have to price their products at next to nothing. Instead I think the key to success is specialization, differentiation, innovation and finding your market niche before someone else does. The IT world is fast and efficient, so it is no longer enough just to exist, in order to be successful, one must adapt.

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  13. Jaimie C

    Big companies dominate the internet world which makes it hard for smaller companies like Dropbox, to compete with larger companies such as Google. Especially when they have adapted the smaller company’s ideas and are now selling data storage at a cheaper price. Companies such as Google and Amazon are internet giants. Yes, I think it is possible that these larger companies could drive these smaller companies out of business. They have the technology, man power, marketing and advertising departments and the financial backing that some of these smaller companies may not have. They also have their names, Google and Amazon are two well-known and widely used companies and I think most people would not give it a second though to use these companies to store their data. And of course the lower prices will also entice people to go with their companies. As the article started, these smaller companies need to create a competitive advantage by offering specialized storage options for different markets of customer demands. By doing this they can hopefully keeping these larger companies at bay and continuing to grow these smaller companies. They also have a competitive advantage by making their data storage easy and user friendly. It will be difficult to compete with these larger companies but with the ever growing market for data storage and new customers coming online every day; there is a market for these smaller companies. These smaller companies just need to differentiate themselves. If they can do this and promote their name, they will continue to grow their customer base.

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  14. Christopher Behrman

    In the current data storage market, small-scale companies are finding it increasingly difficult to compete with large companies like Google and Amazon. The reasons behind this are the vast resources infrastructure that is already present. Since larger companies, like Google, have an overwhelming ability to cut the costs of their services, small competitors like Box are forced to offer their services at near free prices. This is not a business model that can sustain itself and in order to maintain the growth of their business companies are finding ways to specialize their services to further cater to the needs of individuals. One way that Box has done this is through the storage of digital versions of x-rays. Hightail has taken a similar approach with services catered to the need of law firms. Dropbox on the other hand has taken a different business strategy by continually improving their services to be more accessible and easy to use than the competition. Other services can then be tailored to offset the loss of profits from the storage of data. An example of this could be online system where supplier and retailer data is stored and automatically analyzed to provide instantaneous orders based on stock data from the retail location. In order for smaller companies to remain players in this industry they need to focus on ways to continually specialize their services before the big players like Amazon begin to tailor their services to specific industries. Google has already hinted at plans for future development of industry-specific services due to the financial benefits that come along with it.

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  15. Jeanelle Grant

    I do think smaller companies will be pushed out of the cloud storage industry. I personally use Dropbox over Google Drive because of how simple and user friendly it is. There will always be a market for the smaller companies because of what they can offer its customers, especially if they are developing solutions specifically for their customers. If these smaller companies want to compete in a market that is dominated by bigger companies, they must be able to do what is necessary in order to stay and compete. Google is very aggressive when it comes to acquiring new companies as we have seen with their acquisitions. If worse came to worse, these smaller companies may be bought out therefore eliminating the need for them to compete.

    I do not consider Dropbox to be a small company and was surprised that the article made it seem as though they were. Imitation is the highest form of flattery. The fact that the big companies saw what the little guys were doing and followed suit shows that they had a really good idea. I do sympathize for the smaller companies having to cut their costs so much in order to compete in the cloud storage industry but it makes you wonder how long they can continue to offer services at a lower cost while still earning revenue. I do not envy the position they are forced to be in because of the big players but unfortunately, that is the cost of doing business in this day and age.

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  16. Adam

    A small company such as Dropbox who uses Porter’s model of competitive advantage against large companies such as Amazon could be beneficial short term, but long term they will most likely be wiped out. Financially, they cannot compete with Amazon because Dropbox does not have the reputation Amazon does, and they do not have the luxury of taking large risks with small consequences. However, Dropbox should use differentiation advantage against Amazon, they cannot take them head on. They have to find a way to appeal themselves to a certain target audience and focus on specializing to that, and not just in general. For example, Dropbox could specialize towards students and university’s. They could make their product beneficial for group work, and compatible for taking notes and accessing them across different devices. This already exists in a few different companies, but making it user friendly towards a student would be beneficial.
    The large companies do have the potential and the resources to drive the smaller companies out of business, but the question is, is it worth their time? If they are not major competitors, or they are highly specialized towards a certain company. It would cost large companies a lot of time and money just to reach that competition level of differentiation, and more time and money to wipe them out. Another way for the smaller companies to keep surviving, is to offer contract work for their consumers, but they would have to ensure they keep them happy and offer exactly what they want. Differentiation is key for the smaller businesses in order to survive.

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  17. Maddison

    Unfortunately, I think after reading this article it sounds as though the big companies such as Amazon and Google are going to drive the smaller companies out of business. This article really brings to light the fact that once the big companies find interest in a new line of products times much change for the smaller companies such as Dropbox, Box, and Hightail. These companies do not have the vast customer base that Amazon and Google do that can survive on smaller margins. The big companies drive the price down to the point that the smaller companies are losing customers because they cannot compete. The article did shed light to Hightail specializing in law firm storage and Box specializing in healthcare storage which may extend their current lives. However with Google executives announcing that they are also moving to specialize in the future it will only be matter of time before those companies have to permanently close their doors. What they could do is try and sell to the large companies, so the company does not have to close. Amazon or Google would then not have to put money, research, time and resources into developing a new product or hiring an effective, efficient team to hire them. These smaller companies have shown they can succeed already, it would be an advantage to both for the smaller ones to sell out to the larger firms. It would keep the little guys alive, and the larger companies would easily gain access to new markets and products.

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  18. Kyle Link

    Claim: Amazon and Google will drive out smaller businesses like Box or Dropbox.

    There are two problems with this assumption:
    1. Services Provided in the Cloud
    2. Target Audience

    Amazon and Google are in two areas of expertise when it comes to the cloud: Cloud computing and cloud storage. The article makes a couple remarks regarding this but they fail to make the distinction clear. Dropbox and Box DO NOT offer cloud computing services. This isn’t something their infrastructure supports and is honestly a hard business to get into. Therefore the bulk of Amazon and Google’s clientele (from the perspective of revenue) are companies requiring domain space and storage. This is not your standard consumer for Box or Dropbox. These are businesses with extensive websites that require the infrastructure to not only host their products but be able to handle all the computational processes as well.

    Cloud storage is what us as consumers like to use for data integrity aka “back ups”. This is the market that Box and Dropbox focus on. To simplify this, a target consumer of Dropbox or Box is a person that has some data that wants to ensure that it is backed up and is accessible anywhere in the world. These consumers are not interested in hosting a website or providing a online product to company of employees, they are just looking for a service to improve the confidence of their data. Therefore in order to remain competitive with Amazon and Google’s low $/gB prices, they focus on the small things like user experience, platform integration and ease of use.

    The last main distinction between these two sets is infrastructure support. In order to support cloud computing, the number of servers required / clientele grows at a consistently constant rate. In terms of cost for a company, it is much more expensive to house more servers that it does to house for storage space. Since Dropbox and Box do not need as much emphasis on servers, their costs don’t climb nearly as rapidly with only expanding in storage capabilities. So even though Amazon and Google may continue to cut each other’s $/gB, DropBox and Box can remain in the game since their operational costs to house their infrastructure will be much lower.

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  19. Caleb Moore

    A company like drop box has to operate with a target market in mind. Lets say dropbox is feeling a lot of pressure from the larger data storage companies but yet they still have a market share in the business. The only way to keep their market share and grow is to operate, while aiming at a specific target market. In order to attract paying customers in a business where usage rates are just penny’s a month, small storage companies need to offer other services along with storing data.

    Larger Companies such as Google and Amazon, in my opinion, will drive out other smaller competitors because of the vast collection of resources they possess. They are established and do not need to raise the capital to invest in more storage units. They are already immediately available to them because of the other online services they use such as iTunes or the servers and storage amazon has to handle the vast retail orders. These companies founded the could storage industry and established themselves as front runners in not only cloud storage but in other areas as well. They have the resources to stay afloat when hit with hard times and have the capital from others departments to and business niches to attract business. Due to their large name brands companies such as google, apple and amazon already have the attention of future users. They are trusted, established names that have a reputation for good business and doing things right. Taking hold of a market that is new yet similar to their already established niches will only further their success.

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  20. Braedon P

    the company “Drop Box” is identified as a smaller company compared to Amazon or Google. it will be very hard for the smaller companies to compete with these larger companies, especially when the bigger companies offer lower prices for storage and also could hold more storage for your documents. Companies like Amazon and Google have a established name and brand, they are both well known to be a reliable and secure web sites. Most people would rather pay for storage with there personal documents with a company that everyone knows about rather than a small company that you don’t know about. With the power that these larger companies have, it will not be long before you see smaller companies like Drop Box get bought out or go right out of business. If these smaller companies want to exist in the Document storage business, they will have to offer more storage for a next to nothing price, or be 5 to 10 percent lower on price than the larger companies like Google or Amazon are. The smaller companies will also have to improve there loyalty and security with customers, offering some sort of security when storing documents with there company. The online storage business is a very hard business to be in when you are competing with these huge known companies, it is important to differentiate yourself from companies like Google or Amazon, or else you may find yourself out of business.

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  21. Brendon H.

    A company such as Dropbox can use Porter’s model for competitive advantage by pursuing a differentiation advantage. Currently they are trying to do so by making their product extremely user friendly, as well as offering two gigabytes a month of free storage to all its customers. This is a smart business model and gives Dropbox a competitive advantage because it is focusing on user friendliness, a model that Apple focused on in it’s initial years of growth, and helped to push them into the massive technological leader that they are today. Apple is known for the simplicity of it’s iPhone in the fact that anyone can pick it up and start using it right away with little to no training. This is very appealing to customers trying out new products and services because nowadays people do not want to have to go through extensive training to learn how to use a product that is supposed to make their lives easier. Following this business model is going to help Dropbox to rise above the others when it comes to cloud based storage. This is a relatively new technology, and people are just slowly starting to understand and utilize its many benefits, and the best way to attract more customers to a new technology is to show them how easy, safe, and beneficial it is. Dropbox has designed a simplistic user interface where users can upload and store any data they wish and do it easily. Dropbox is attracting new users by teaching its users how to use this technology properly and helping them every step of the way. I believe that more and more customers will sway towards Dropbox’s cloud based storage because of this competitive advantage.

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  22. Adam Virgo

    In this highly competitive information storing business it is extremely difficult for the little guys to compete when dealing with companies like Google or Amazon who have huge capital and resources. They have bargaining power and you cant really get in their way. Unfortunately for these smaller companies they will no longer exist shortly as the big guys will continue to lower and lower prices as well as offering larger volumes, and as we learned in the Big Data video volume is becoming a more and more increasing issue as it is constantly rising everyday and these small companies simply in the long run will no longer be able to keep up with the needed infrastructure of the larger ones. Companies like Dropbox just don’t have a competitive advantage in the market place anymore and when you have an elastic demand for something like data storage individuals are going to go for the most inexpensive option with Google or Amazon. However in a world where the protection of information is continuing to become scarier and scarier if these smaller companies could find a way to protect and encrypt data better than the big companies they may just have a chance to stay alive. Although that would be a very short run solution and likely that the bigger companies too would gain access to this additional protective software and once again leave Companies like Dropbox without a competitive advantage and no way to justify their higher prices.

    Reply
  23. Ryan Hennesssey

    Smaller businesses in this industry will cease to exist, there is jus too much competition and it is relatively easy for these companies to substitute with there own personal server. About the only on of porters five forces that they have working towards their benefit is that they would have very little to worry about with regards to new entrants. The only reason that there wold be a low threat of new entrants is that there would be very little they could do to make money, most of what the competitors out there are offering is free. There would be very little in the way of them actually starting their business but they would come up to a massive roadblock when they attempted to make money selling a service for free. Eventually the larger competitors like Amazon and Google are going to enter these niche markets as well and undercut the others price. They will do this because it is the only way to expand their business and they can afford to provide their service at cost because it is only a small part of each of their businesses. As long as these guys are around they will need to a have a differentiation focus, they will need to have this because they will not beat Amazon’s almost free service. The more they are able to keep that focus the longer their company will survive before Google and Amazon drive them out of business. As far as far as I am concerned Drop box will be the first out of business because they seem to not be so differentiation focused.

    Reply
  24. jummy

    Free may not be a business model, but when it comes to competing with the biggest players in the IT storage business, other companies competing with Google and Amazon may want to consider this. Not only is drop box competing in price with Google and Amazon, but also competing in space. It seems as though the first-in, first out principle might be applying to drop box as they are still in the market because of the customers who are slow in responding to change, so they may be having a hard time dumping Drop box. The business strategy adopted by Google and Amazon by cutting prices to 2.75 cents will also prevent new business from gaining easy entrants into the market which is a form of protection of the market. As a result of this, there is high possibility that even the existing competitors such as drop box, hightail and box are threatened in the industry and though, it seems that they are doing fairly well, it also seem that it may not be long that they will get kicked out of the industry.
    However, the smaller companies can maintain their existence in the industry if they step up to compete with the big players. This, they can achieve by offering lower prices for larger storage capacity than that of their big competitors that have posed major threat to them and by new innovations that will make them outrun the big players (Amazon and Google). This will definitely be a bit of struggle. Hopefully, they can get through it.

    Reply
  25. Mitchell Kolt

    Using Porter’s model for competitive advantage, how do you feel that someone like “Dropbox” will compete in this changing industry? Explain which generic strategy they will pursue?

    I feel that someone like Dropbox who uses Porter’s model for competitive advantage will work for Dropbox. Why? Because the business model Dropbox uses is targeted at specialized individuals and firms. These specialized individuals and firms are in the health field, law firms, entertainment industry etc. These are all areas Dropbox has decided to market too. I think this will work because the areas of the market Google and Amazon are going after are more at regular Joe’s than specialized firms. Likely warranting a payment for the services of Dropbox from specialized firms. Obviously these firms will only pay a premium for their services if the products of Dropbox help them. If Dropbox’s business model changes and starts to compete directly with Google and Amazon I predict they’ll be in dead water. So if they follow the specialized market model it should work.

    Do you feel the larger companies like Google or Amazon will drive these smaller one out of business? Why or Why Not?

    I do think Google or Amazon will drive these smaller businesses out of business. Mainly because they have a massive market share, a well-known name and lots and lots of people use their product. Making it easier to have their products free or cheaper than small time competitors. If for some reason a smaller competitor is having success, what likely happens is Google or Amazon would buy them out. Eliminating the competition.

    Reply
  26. Flo

    This article is quite interesting and to be honest, since 2012, I have been using the DropBox (I did register but was not aware that it was working). Once my phone broke on me, I was quite devastated that most of my son’s pictures were on it and did not bother to transfer onto a computer. Luckily, I signed-in on the DropBox and everything was saved and well kept. I was extrememly relieved and noticed how convenient it was to have that easily setup. It synchronizes from every photo taken or document saved, so I can erase it from my phone to maintain more storage space; and access it from my computer. It may be a small company competing with large companies but it did provide me with the assurance that my memorable pictures were still intact. Big companies such as Google and Amazon may have an advantage, however, DropBox is cost focused and they should soon look at differentiation to set them apart from their competition. Companies should be consumer-focused instead of looking at the big picture which is competition. Extra add-ons are a must and essential to the everyday consumer, depending on their preferences. It does cost money to rent a “storage locker” for those who need online access anywhere at any given time, especially for businesses and alike.

    Reply
  27. Sarah Pfeiffer

    Being a smaller organization in an industry dominated by two renowned companies, Dropbox has a number of obstacles they must inevitably face. Determining how to overcome or work around those obstacles is vital for smaller firms competing in a tough market. When competing with household names such as Amazon and Google, distinguishing your service or product is key. According to Porter’s model of a competitive advantage, the generic strategy that I believe a company like Dropbox should adopt is differentiation focus. In order to stay in business and continue making a profit, they will need to distinguish themselves from their competition and specialize in a few areas that will capture the loyalty of their customers.
    Although in the article it appears that the companies Box, Dropbox and Hightail are currently faring well in the industry, will they be able to maintain and enhance their market share? The amount of resources and capital Amazon and Google have access to in comparison to their lesser competition will make it extremely difficult to compete with in the long run. If it is worth their time, money and resources, these two companies could potentially steal the market share away from their competition, ultimately driving them out of business.
    Unless smaller companies can maintain a competitive advantage that uniquely differentiates them from their competition, they do not stand a chance in the industry. With that being said, I think it will be a constant struggle for companies like Dropbox to preserve their share in the market.

    Reply
  28. Lucifer

    Large companies like Amazon and Google have a lot of power. Like the article states their customer base is so substantial that even the tiniest of profit margins can result in huge income for the businesses. This gives them a huge advantage over smaller companies. They also attract the best people. Anybody would like a job working for these prestigious powerhouse companies and usually when you attract the best people you get some of the best ideas. This allows them to continue to diversify and innovate and grow. These companies can also smell profit like a shark smells blood in water. So if you have a niche market and are making a good profit from it you can be sure a larger company will try to move in and do what you do better and cheaper. It is the prerogative then of smaller companies like dropbox, box, and hightail to make sure their service is unique in some way. They will not be able to beat large companies on price so the question becomes what sets us apart, what makes us better than these large competitors. These are the questions that must be asked and answered if there is any chance of survival. They are headed in the right direction going after niche markets and providing a specialized service that larger companies either can not compete with or have no desire to compete. I need one more sentence to make this two hundred and fifty words. Four more words. Done.

    Reply
  29. Elena Huai

    As we can see from the article, Box, Dropbox and Hightail are all small companies that are trying to compete with large companies like Google and Amazon which seems not impossible for them. There is always no hope for small companies to compete with large companies as they do not have enough reputation or enough money to fight with them.
    Just like the example in the article. All those three companies are small. They have already cut their price to survive in the competition. But large company like google and amazon, they provide nearly free service in storage on internet for every people in the world. This gives those small companies a really hard time. As internet are getting more and more useful than ever and nearly 70 percent of people around the world using it, those online-locker are becoming more and more useful. Like me, myself, I use internet a lot and I also use online locker to store many things like photos and videos. For me, free and huge space are two main points that attracts me most. So as many other people.
    Just like Amita Potnis, an analyst at IDC, said in the article, there is a place for all of them. Not only large companies but also small companies, that can find their own place and suvived in this big competition. They need to find their own special characteristic that would attract people to use it. They also need to know what actually the customers need. That is the main point.

    Reply
  30. Fran Oksasikewiyin

    IT is ever changing, with successful companies like Google and Amazon, there is always going to be the smaller companies trying to make it’s way into the market as a competitor. Dropbox is more into the cost focus strategy. By offering the same uses as Google and Amazon offers, and next to nothing, Dropbox needs to find its competitive edge, find their niche. After all, Google and Amazon had to start somewhere once upon a time. Free is always nice to get, but it also has its price. If Dropbox ever leaves the market, then there will be another competition that Google and Amazon will have.

    Reply
  31. James Bradshaw

    I believe that DropBox will have a very hard time competing with huge companies like Google and Amazon. They will need to have some very good differentiation from there competition which may be very hard with the vast amounts of money these huge companies have. With being an industry innovator in the technology used they may be able to ride the wave that Google and Amazon produce. By staying ahead of the curve they will be able to prosper from providing something that Google and Amazon can not. DropBox’s success will lie in knowing what end users want and innovating ahead of the curve to attract early adopters. It is unfortunate but money makes the world go round and these smaller start ups will be behind the eight ball when it comes to competing head to head with one of these giants. For smaller companies trying to stay on top of the computing industry DropBox might be an example of what to do or what not to do. I guess we will see!
    With all these mega companies coming and taking out the little guy I think we really need to take a look at how we allow these corporations to prosper. I think we need to get back to more of a community feel where you visited your local grocery store instead of ordering online. Companies like DropBox have the harsh and frightening reality of dealing with theses huge corporations on a head to head level. I am definitely someone that cheers for the underdog and I wish companies like DropBox the best when dealing with sharks in bloody water.

    Reply
  32. Robbie Rutkowski

    In this day and age using a Cloud to store data is very common. Not only does this allow you to access your documents wherever they are needed which is a great convenience but allows the easy sharing to other people in such a way of creating a group document. The increase in usage of these kind of systems have allowed the increase in companies creating these cloud software, however; there is a great competition because of this and companies like dropbox are having issues gaining new consumers. The two powerhouses of google and apple have their own clouds which allow their users to access their documents easier over their devices, as well as other devices with just a simple network access. Dropbox will have to improve their technology if they want to gain a competitive advantage on the companies that also provide cloud to store information. Companies not only create clouds for all types of documents, there are also many companies providing clouds for other types of documents that are more specific. One of the largest is Evernote a notebook that allows the access to your files with automatic updates that are stored in the cloud. Overall I believe that cloud storage is an amazing thing and personally use it on a daily basis

    Reply
  33. Sarah

    Considering Dropbox’s competitive advantage of offering good quality services at no charge and has millions of customers, they are at a stage where they could evolve and change the industry. It’s ability to provide simplicity to its consumers is at a good position considering google also offers a simple site for searching the internet compared to yahoo search. The strategy Dropbox is aiming to achieve is driving down prices which will lead to big companies driving down their prices. As big companies charge consumers for the amount of storage they can have, Dropbox aims to provide unlimited free storage space.

    I feel like Google and Amazon are already well established companies and have high credibility with their services that the smaller ones are sadly not able to compete to their level. Yahoo used to be the main site for searches, although when google arrived and provided a faster and more effective search engine, the world was taken by surprise. Google is now the leading search engine for education, careers and even branched off to provide news, emails, videos. Amazon has competed and reached a high level of quality with its shipping and handling advantages. Looking at these two huge companies, they are highly likely to drive out smaller ones. As Dropbox aims to lower prices, big companies will guide their consumers to purchase other services they provide as a means to keep their sites alive. Google provides many more services than Dropbox and if Dropbox wants to achieve its goal of eliminating online fees for storage, they must also offer services such as the big companies and offer them at no fee.

    Reply
  34. dreiter2014

    We are living in an information society in which knowledge and information has become crucial for every organization to survive in the competitive marketplace. Needing a lot of information in order to stay competitive, means needing a lot of space where saving all those crucial data about customer wants and needs. Giving to companies and customers the possibility to save their data not on their own computer and devices, but somewhere else in the rest of the world (known as cloud computing and storage) has become a huge business nowadays. And especially two firms are doing very well in this storage business: Amazon and Google.
    Various smaller companies try to enter in this market segment, since managing all that data should be a good business. But to compete with the two giants has (almost nearly) become impossible. The problem for everyone is price. And Amazon and Google are driving the price of storage to zero, using ‘free’ as a business model
    Even by the standards of computing, where services seem almost invariably to become cheaper and faster, storage prices have had an exceptional fall. And the crazy thing considering this enormous price cuts in storage prices, is that it costs Google and Amazon a lot to provide those storages. According to one person with knowledge of the system, Google for example spends about $2 billion a quarter on its computing infrastructure.
    However, over the last years, the above mentioned two big companies were able to make huge amounts of money providing other types of services, so that now they can provide almost nearly free information storage attracting more and more customers all over the world applying this cost focus strategy. Obviously smaller firms trying to enter in this business cannot compete with the prices and the popularity of Google and Amazon, which makes them the leaders in saving all our fundamental knowledge and information and giving them somehow the power of what nowadays is considered more crucial than ever before: knowledge.

    Reply
    1. Hesham Elkadri MGT 3061

      As mentioned in the article it is a flight for survival. Keeping up with the bigger names is going to be tough because I feel they have locked down the market early on in the cycle and have grown with the consumers. That be said, I don’t think they will ever drive competitors out of business. The market place is just too big for people to control people always want more and its all about adapting. For example msn had the communication on lock down for so long then some one like Facebook who is bigger and better came in the market with better ideas to take over. Then twitter followed with different ideas and did just fine even though Facebook was dominating and I think that’s what will happen with drop box. People have so much varieties they don’t even have to stick to just one.

      Reply
  35. yiwei zhou(Daniel)

    Dropbox is a very useful free online file synchronization tool, which is the company’s online storage services, Internet file synchronization are realized by cloud computing, the user can store and share files and folders. Dropbox Provide free and paid service, Dropbox fee including Dropbox Pro and Dropbox for Business. They have client software and web client. Hightail – formerly YouSendIt – is a cloud service that lets users send, receive, digitally sign and synchronize files. The company’s early focus was on helping users send files that were too large for email; in 2007 it started adding features and plug-ins for businesses in 2007. The service can now be used via the web, a desktop client, mobile devices, or from within business applications with a Hightail plugin. Companies like Dropbox and Hightail are emerging companies, they are relatively smaller then company like Google. Google has a complete and mature service system in the area of data storage. It is very hard for Dropbox and Hightail to compete with Google. If smaller companies want to survive in this competitive market, they have to deeply understand customers needs and create valuable products to satisfy customer needs. For example, company could add more functions and forms of online data storage. Also, they could expand free storage space to attract customers and increase popularity. Competing with big companies like Google is not an easy thing, so Dropbox and Hightail have to work hard. Otherwise, they have risk to be driven out.

    Reply
  36. Nicole Meurs

    I feel like a company like Dropbox would only have a chance to compete in the differentiation part of Porter’s model. If they focus on one area that big companies like Google and Amazon have not quite reached yet, or perfected and they make it the best. Then they continue to work on making it the best then that will be their only chance for survival. They can target one specific area of consumers and do whatever is necessary to win over their loyalty and trust. I do not think a company like Dropbox could even try to compete in the areas of focus and cost leadership of Porter’s model for competitive advantage as they do not have the financial capital backing them that the mega companies like Google and Amazon do.
    I one hundred percent feel larger companies like Google and Amazon are going to put smaller companies out of business. As the article states about both Box and Hightail they basically have to offer unlimited free storage and push their costs elsewhere in order to attract and retain customers. In the meantime companies like Google and Amazon focus on one area until they excel at it, then move in to dominate another area, with much more capital available than any other smaller companies. The departments are so large that once a department specifically perfects its area, such as research they can start researching a new product while the current product moves into the next stages of development. The four M’s of resources are completely on the researcher’s side (Machinery, Manpower, Materials and Money).

    Reply
  37. Craig Lyon

    This article put into perspective for me on how large this type of business actually is. With the market share in which these “smaller” companies have generated with these other companies like Google and Amazon looking over them is incredible. Although their market share is large, I believe that companies who might not have as much firepower as others should stick to their consumer directed practices. By focusing strictly on the people who are using the service they provide they will be able to provide a well-rounded service that helps companies directly to their needs. Although Google and Amazon’s prices may be lower, some people may look at things like encryption and how safe their information really is. Security usually speaks with how much you are paying to keep your information locked up for your convenience.

    Competing with such large companies like Google is what some would call impossible. With the amount of capital and resources Google is able to produce the best services for the lowest prices. By lowering prices smaller companies need to cover their cost somehow, but it might not even be worth it. It seems as if anything Box, or Hightail do, the large companies will be right behind them considering things like specific categories to specialize in strictly what businesses are using their systems for. I believe these smaller companies will create a smaller more personal based infrastructure to provide their customers with an unlimited amount of storage with a much more reliable customer service.

    Reply
  38. Bret Tasker

    I find this article very interesting since I use Dropbox for all my files after my old laptop hard drive crashed and I couldn’t retrieve any of my old files I hadn’t saved to my external hard drive. For the smaller companies to compete they need to have the better product and features than the larger companies. In Porter’s model for competitive advantage I believe the smaller companies’ needs to stay in differentiation focus on its product, as the article says the big guys (Amazon and Google) can be the cost leadership models by being free. The smaller businesses cannot compete with free as they would go out of business by making no profits. The differentiation focus allows them to charge for their product because it should be superior to the larger companies’ free model. I feel eventually the larger companies like Google and Amazon will drive them out as either they will match the smaller companies in the quality of product department while still offering it at a lower price or maybe even free. Also if the larger companies cannot copy the technology they have the money resources to just buy the smaller companies to gain the technology. Once there are established companies in a market, the threat of substitute products to the larger companies comes down to dollars and cents as they compete with larger companies but if a substantially smaller company has the substitute it really is only a matter of time until their competitive advantage is matched in technology or just simply purchased.

    Reply
  39. Christian Blott

    From a network capacity standpoint it would seem at this point at time that a head on competition approach with Google is not feasible. The landscape was far broader when these start-ups like Dropbox emerged but as things have progressed and Google has acquired more companies and new entrances into specific markets it has made it incredibly difficulty for recent tech start-ups to compete with a player that has that kind of leverage. It is similar to other industries not in the online world; you can’t expect to start up a business that carries everything, because how are you going to beat Wal-Mart on cost? One of the truest business sayings is focus on what you do well. These smaller organizations that have acquired industry professionals in education and healthcare are definitely taking the right approach to realign their services to meet specific industry needs. Generally, in most industries, the higher level of specialization results in a premium price that the buyer is willing to pay for that level of service.

    Reply
  40. ethan lauscher

    i believe the smaller companies like drop box will go into a focus strategy where they focus on one type of consumer whether it be medical or accounting or law. I think they will do this because they could specialize in making there systems more user friendly for that type of application that firms will choose to use them rather than the bigger data storage companies because it will be more convenient for that application. It is clear that they can not compete in cost because the big companies are just to large. Google and amazon are also great innovators with huge budgets to come up with new ideas the public will like and they have enough money that they can expand really quick to cut off other people trying to enter the market. If the small companies like box, dropbox or hightail go into a more focused strategy there target market might be small enough that it wont be worth it for google or amazon to try and steal there customers but large enough for them to make a good profit.

    Reply
  41. Mike Paulson

    I’ve thought for a while now that Dropbox is going to run into issues competing with the bigger players. They have the advantage of being the first big player in that market and as such have had a longer time to refine and improve upon their product. With players like Google and now Amazon with their ‘Zocalo’ service I wonder if that will be enough. The economies of scale may simply make it impossible for Dropbox to compete on price alone. Both Amazon and Google already have enormous infrastructure in place to support their expansion into this market and both of them will be able to update and maintain the necessary datacenters far more efficiently than Dropbox. I suspect Dropbox is also going to have a hard time continuing to differentiate itself if it continues going after the same market it currently is. Both Google and Amazon simply have far more resources to dedicate to developing and improving upon these systems and a much large pool of talent to draw on potential designers and programmers from. Even if Dropbox were to develop an amazing new feature, Google or Amazon would likely be able to duplicate it for their own product in an incredibly short amount of time.

    I feel as though the only reason Dropbox is currently able to continue to operate is because many people simply became more comfortable using their solution due to it being the first one out. Additionally many people and businesses are wary of relying too heavily on Google services as they openly data mine all information you store on their services. Amazon on the other hand currently seems to have an excellent corporate reputation and I would not be surprised to see many companies flocking to their new ‘Zocalo’ services once it has had a bit more time to establish itself. I do wonder if Amazon has any intentions of introducing a home version of their Zocalo service. With both Google and Dropbox being available for personal use many IT professionals are going to be more comfortable with those services and thus more likely to favor their implementation in their work place.

    I was actually surprised to learn about Hightail as I have never encountered them before this article. Their business strategy does seem like a good bet as it allows them a much better way to differentiate themselves from the big players. Unfortunately it seems leaves them targeting a much smaller market thus reducing their overall visibility. If either of the big players were to turn their attention towards Hightails market they would likely be in a great deal of.

    Reply
  42. Kristen Gunderson

    After seeing the numbers provided in this article, it completely shocked me, since the first gigabyte of storage was $120,000 and now only cents, it is incredible. Dropbox is a company that created it’s own Internet service for users which allows them to store items electronically. This intrigued the much larger companies as well. I do think that it is a huge challenge for Dropbox to keep up with Amazon and Google (leading competitors) because they’ve founded themselves a large group of reliable users already. Dropbox would have to come up with something very different or more appealing to users. This leads me to say I would for sure characterize Dropbox as a cost focus industry because they have the biggest challenge of competing with the other companies primarily about price. Being that the other more ‘well-known’ companies can sell their storage for little to no money and still make a profit, this challenge holds a huge barrier for Dropbox. With Dropbox using the term ‘unlimited’ that could primarily attract users into supporting that company, because nobody will say no to ‘free’ however it is risky as well…
    The progressively intimidating innovation of the ‘cloud’ service now offered by Amazon and Google gives them the ability to drive smaller companies such as Dropbox out of the industry. This also gives them a rather large competitive advantage over the ‘underdogs’ I guess you could say. The large companies are more familiar with their target market and know what to provide to them in order to succeed.

    Reply
  43. Anderson Ebhomielen

    Competition is a must in an ever changing business environment. Cloud computing and online storage is becoming a trend in the business of IT and there are big and small players in the industry. Amazon and Google are the major big players having significant market share as compared to Box, Dropbox and Hightail. However, for the small players to survive they must create their competitive advantage and ensure that it can be sustained over a long period of time. However, using the Michael Porter’s strategy, it will be suicidal for companies like Dropbox to use cost leadership as a competitive strategy because the big players are offering these services almost next to nothing, oven this platform, I feel companies like Dropbox may have no place in the market because these big players like Amazon and Google have dominated the market with their IT facilities and finances to play around with. On the other hand, Dropbox can carry out a SWOT analysis to adopt a differentiation strategy and focus to compete favourably. The company must make sure that it offers unique services to customers which the big players may not be able to provide.

    Furthermore, cloud computing and online storage is expanding to cross sections of users, Dropbox should narrow their focus to some specific target market and customers by working to meet and exceed customers satisfaction and build customer loyalty.

    Be that as it may, the issue of whether big companies will drive out smaller companies remains and issue to be debated. In my opinion, if think it is yes and no. Yes, the bigger companies can drive out smaller ones because the prices offered by the big companies for services are relatively free and the smaller if offered same services will not be able to make profit to survive as customers are particular of getting product and services at the best price to minimise cost. On the other hand, the answer is No, if the smaller companies can create a niche for themselves in the product and service provision that is of good quality and distinct for others even though the price is a little higher because though people want the best price to minimise cost but they are ready to pay more to get good value for their money. According to Amita Potnis, “there is a place for all of them” only if they can create unique values for their products and services.

    Reply
  44. Daniel Donkersgoed

    I found this to be an interesting article. I had to idea the competition for online storage space was as tight as it is. After reading the article, I believe that companies like Dropbox or Hightail are the most Cost Focus orientated. I think they have chosen to be cost focus because that is the only way they will be able to survive. Companies like Google, Amazon or Apple are very able and willing to cut their prices and do whatever needs to be done so they have they best product or service on the market. I think smaller companies need to clearly differentiate their product from what the other companies are doing. They have stated that they are now charging more for additional products, but even those products need to be more than what Google or Amazon can offer for free. So I think Dropbox and other companies are a Cost Focus company, but I think they should change to a Focus Differentiation , because they cannot compete with free. I do believe that the big companies will drive out the smaller ones because they can afford to do so. Unless DropBox or Hightail come up with a unique product than many consumers would rather go to a company where they have many services, and many services they can access for free.

    Reply
  45. Brody

    I believe companies such as Dropbox will have to adapt a differentiation focus in order to develop a competitive advantage over the larger companies such as Google and Amazon. Dropbox will have to differentiate what they are offering because, clearly, they will not be able to beat out competition based on price since the larger companies are driving prices down to next to nothing. A generic strategy Dropbox can adopt to is simplifying their product and make it more consumer friendly. Dropbox will have to attempt to offer its consumers something that other companies can’t. If they cannot do this, consumers will always choose the cheaper option for the same thing (besides a few people due to brand loyalty). If Dropbox is able to successfully differentiate their online storage devices, they may have a chance of survival and maybe even thrive in this business. For something such as online storage, I feel it is a very elastic market and people will almost always search for the lowest price. Saying this, I believe larger business will end up driving smaller business like Dropbox out of business, because, as Aaron Levie says in the article,” ‘Free’ is not a business model.”

    Reply
  46. Cedrine

    Using Porter’s model for competitive advantage I would say DropBox is a cost focus Industry. I believe larger companies such as Google or Amazon can drive smaller companies out of the market if they do not do anything about it. The small player should joint their efforts, merge, constantly innovate to be able to compete with the bigger players and stay in the market

    Reply
  47. Kate Copithorne

    I believe that Drop-Box would fall into the Cost focus strategy, but I also can’t seem them being able to compete much longer the big players will slowy either merge with with the small and middle sized companies, or force them out based on capabilities, and prices that they can offer. with the media. Although Drop-box use to be one of the big players in the industry it is being taken over, by the larger players.

    Reply
  48. Naser Elamine

    Using porters model, in my opinion i would say, they would have to be in the “focus differentiation category, and that reason is because, its so competitive, and the only way they attract and keep clients is to have a uniqueness or in-house technology that can compete and beat against the rest. In this specific scenario “free was on the table” and no company can compete against free. Also drop box has an option to also offer there drop box with unlimited storage and diverse there portfolio and dive in other products and get there costs through those profits. Google and amazon can drive these smaller companies out of business, but if they are smart which I am sure they are, buying or merging with the smaller companies can help them in the long run.

    Reply
  49. Kaitlin Sibbet

    Personally, I think Dropbox won’t compete very well in the industry. However, I would said they are Cost Focused above all else. After all, you get two gigabytes for free or you can upgrade to a terabyte. To upgrade after that is seemingly free. They obviously are not differentiation focused, as they can’t even hold as much storage as some of the others, as stated in the article. While Dropbox is supposedly simpler and more consumer-friendly, it doesn’t help much if no one knows about you (I’ve never heard of them, on that note).
    I do believe the bigger companies will drive Dropbox, and all of the other small companies in the same business, right out of that business. If Google and/or Amazon can offer the same services for cheaper, then why wouldn’t the customers go there? After all, they already know the names of Google and Amazon, and know they can trust them with this “locker” kind of business.
    Then again, with the recent iCloud fiasco (surely you’ve all read about it online), it shows how the big businesses aren’t always more secure.
    But that’s just a small setback. Will people stop buying Apple products because of this? Maybe some, but not many.
    As Amazon Web Services brags, they’ve got other major companies already inside of their “cloud”/”locker”: Netflix, Amazon, and other huge companies. How could a small company like Dropbox compete with that?

    All in all, it seems like a business meant for the big fishes. Even though it was originally developed by the smaller ones… well, you know how to food chain works.

    Reply

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