back to article Will the stock market drop Dropbox like it's hot? Numbers say no

A look at Dropbox's IPO filing suggests a conservative company controlling costs and heading towards profitability this year. It has passed the 500 million user count, though only 2.2 per cent (11 million) of that base are paying customers – the rest use its free services. The firm had hosted its file sync'n'share data on AWS …

  1. Nate Amsden

    per customer or per user

    Do these mean the same? To me a customer could mean a business with many users in the business. So $6000 for 1 customer with a unknown number of user accounts wouldn't be the same comparison as $100 per user.

    I'm sure many of those businesses sign up for larger user counts than people actually using the service as well.

    Haven't used either service myself(I run my own servers), other than getting an occasional download link from someone from one of them, usually dropbox I think.

    1. Keith Oborn

      Re: per customer or per user

      Indeed. My former company used Box, and no way were we paying $6k per user per year.

  2. ratfox Silver badge
    Paris Hilton

    such as Apple making iCloud a worthwhile competitor.

    I'm not sure how that would make a difference? Dropbox already has plenty of competition from Google and Microsoft, and their products are reasonably worthwhile. Were Apple to somehow decide to wake up from their slumber, I doubt they'd go for the people who would otherwise choose Dropbox.

  3. Anonymous Coward
    Anonymous Coward

    So where does the money come from?

    I enjoy working the stock market myself (I'm a very small player though) and there's no way I'd invest in this. Because... what the subject says: where does the money come from?

    People claim websites can generate money but generally speaking it's not so much the websites (or provided services) themselves but more so the potential for advertisements. I'm sure that IT illiterates (your average broker) doesn't really keep up with recent developments but as most of the tech people know the resistance towards online advertising is steadily growing as of late.

    The use of ad blockers has become second nature, most browsers (to my knowledge Opera was first) now even include these themselves.

    So... If you strip away the advertisements then what revenue is left? Also considering that Dropbox provides its services free of charge, and last time I checked the use of an adblocker wasn't blocked.

    And that leads up to the question in the title.

    It may sound like a nice investment on paper, but there's a difference between theory and the real world.

    1. Ken Moorhouse Silver badge

      Re: So where does the money come from?

      "Dropbox provides its services free of charge". Yes, but 2.2% are paying customers, which equates to paying for a "guaranteed" storage allowance as opposed to income derived from advertising revenue, so a relatively more solid asset.

      The question is whether free accounts (presumably the remaining 97.8%) engenders loyalty. Will Dropbox (with one eye on shareholder dividend yields) start tinkering with the boundaries between free and paid-for? If so, they may alienate lots of users who will jump ship, rather than paying. When users are sharing files then, if one side switches to using A N Other Product, it constrains the other side to use that same product too, which affects loyalty, and introduces new users to that other product quickly.

      1. teknopaul Silver badge

        Re: So where does the money come from?

        Agreed, and the flip side of that is who would want to compete in a market with 2% paying customers, and a large established market leader.

        Dropbox looks strangely stable on that context.

        Not that I will trust them with my data. ;)

      2. goldcd

        I think they'll be fine.

        Yes, only 2% of customers may be paying - but customers pay to get more storage.

        More interesting stat would be how much of their storage is paid for?

        How much of a paid storage level is actually used?

        Their conversion rate of free to paid?

        Dropbox was my first 'cloud file thing' and I have a soft place in my heart for them for that free service I really appreciated.

        I semi-randomly ended up paying google a tiny amount each month instead - but I think dropbox is still the one that's going to make money - and my reasoning is because my mother uses it.

        Not just that she uses it, but how Dropbox doesn't intelligently de-dupe files, but how it encourages duplication across accounts.

        e.g. My brother-in-law creates a folder containing pictures of his children and shares the link. My mother clicks on the link and mounts it to her dropbox account. She loves that, a folder where pictures of her grand-children magically appear - but for every photo uploaded, it consumes her free dropbox space - and then ultimately nudges her to pay (just a little bit) - whilst on the server side the cost to dropbox is just a smidge of additional metadata.

  4. Pascal Monett Silver badge

    Better because your customers pay more ?

    Okay Box, you're taking the high road and looking down on the riff-raff. Nice clean air where you are, I guess. Unfortunately, targetting Fortune 500 companies means you're limiting your market penetration to a few million max - and you don't have them all.

    DropBox may only be getting $100 per paying customer, but DropBox's market is the entire Internet.

    Let's make a quick calculation : 2% of a billion users is 20 million - and that's already a heck of a lot more users than there are licenses to get from Fortune 500 companies.

    Fortune 500 companies also have a nasty habit of being very demanding for the money they pay - and each Fortune company has its own demands. That's going to be taxing on your Dev department as well.

    As far as I see it, Box, you're going to be eating your words soon enough.

  5. lglethal Silver badge
    Stop

    A company with solid growth and an actual case for generating a profit in the near future (i.e. the next 5 years)? Their IPO will fail miserably - the stock market these days are only interested in shiny shiny things with no hope of profit (e.g. snap chat, uber, etc.)...

  6. 0laf Silver badge

    Box has taken business in the public sector by its products with legislation like the DPA. that mean we can use it with less concern over the misuse of PII.

    Dropbox gives lip-service to privacy, it promotes itself to business but it's not a lot of use for PII.

    What Dropbox has is a name. Where sticky tape = sellotape (UK), filesharing = Dropbox. even where other products are being talked about.

    1. Anonymous Coward
      Anonymous Coward

      Box isn't that much better than Dropbox, stop kidding yourself.

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