In the past I have expressed my opinion that Dropbox did not appear to have sufficient power in the market to compete with the likes of Google and Microsoft (see here and here). The reason was that while for Dropbox its service was a product for others it was merely a feature and so they faced a different cost equation and hence, would likely undercut Dropbox in what should be a price competitive market. Yesterday, Dropbox finally responded and (kind of) dropped its price. Actually, the price point stayed the same but the capacity for paid users doubled. That is, you could still get 2GB for free but $99 per year would now get you 100GB rather than 50GB and $199 per year would get you 200GB. There was also a new 500GB plan.
What is Dropbox doing here? It is not competing directly with Google and Microsoft. In effect, it is ceding the free segment of the market to them. What it did was offer a discount to its existing paid subscribers. If you only needed 20GB, this price change wasn’t really going to help you but if you were at your 50GB limit, you just got a big incentive to stay with Dropbox. I suspect Dropbox had data saying that paid customers were at their limit and so decided to change their pricing menu accordingly.
Now, of course, there is nothing to prevent Google and Microsoft responding. But I am going to revise my subjective estimate of just how long Dropbox has. This is because my previous analysis was based on an assumption that I now believe to be false: that Dropbox’s service was technically equivalent to Google and Microsoft. It is not. It (like its Sugarsync competitor) is better.
I have only one datapoint: myself. Consistent with my prediction I decided to downgrade to the free Dropbox account and switch my main file of about 6000 pdfs over to Google Drive. I use this to keep those files synced for use with the wonderful program, Papers. (Sugarsync, my main backup provider, was never able to deal with that program properly). I only need about 10GB of space to deal with that. So Dropbox always seemed too expensive. Microsoft Skydrive was still working inconsistently with my Macs so I went with Google’s option — also to allow me to search those pdfs.
The move to Google Drive has been a big pile of hurt. To be sure, it is easy to backup from one computer — just drag the folder over. But to keep them synchronised across computers, Google Drive just kept on crashing. I have tried this for two weeks and it is a known problem. Put simply, Google Drive is not ready for prime time. If you want to back up a few files, then sure. But for a large amount, it just isn’t working.
The upshot is that I tried to put my money where my mouth was and it was a failure. Dropbox is a technically superior service. I wish I didn’t have to buy so much space but Dropbox are positioning themselves for heavy users and to try and lock them in. From what I have seen, that is clearly their absolute and comparative advantage. It turns out that they, and Sugarsync for the most part, have solved a difficult technical problem that their larger rivals haven’t been able to replicate yet. I still think that in the long-run Dropbox has a problem but, as you know, in the long-run our computers are all dead.