Why cloud storage is passé and collaboration is king

Ask Box.net CEO Aaron Levie about his company’s cloud storage business, and you’ll hear a long, excited answer that probably won’t include the word “storage” at all. He’ll talk about sharing, collaboration and universal access — anything but the core storage infrastructure that makes Box’s service possible. He’s entirely right to do so, because backup has been done to death and there’s precious little value anyone can add there, and precious few dollars to squeeze out of it.

“This space used to be the lamest category of technology three or four years ago,” Levie jokes, but that all changed with the emergence of Box and competitors such as Dropbox and SugarSync. No longer is online backup enough, companies that want to store files in the cloud have to bring additional value that makes users view them as something else altogether.

You want to compete with Carbonite (s carb), Mozy (s emc) or other big-name backup providers on their own turf? Or with Backblaze and its $5 per month unlimited storage offering?

Although Box charges by the gigabyte, Levie said storage is part of Box’s business only by necessity. It has to charge by volume because it has to pay the bill for the racks of storage infrastructure that house customers’ documents. But Box is all about those documents.

Share, collaborate, access

Content starts in one place, Levie explained, but then it gets shared between business partners, co-workers, friends, attorneys, whomever. “You have to have some way of sharing that data,” he said, something beyond file servers, FTP or Microsoft SharePoint. In an age of near-ubiquitous connectivity and mobile devices that act as mini-desktops, people want to be able to share whatever they want with whomever they want at any point in that file’s lifecycle, and maybe work together on it as well.

SugarSync CEO Laura Yecies takes a similar view, only she also talks a lot about syncing data across devices. If you’re going to keep a lot of data in the cloud, you have to sync it, she said, or you’re beholden to a web connection. SugarSync also makes it easy to share folders and files and collaborate on documents, but Yecies points to offline access as an important characteristic because it means that productivity doesn’t slow down when the Internet does.

When it comes to a focus on syncing, Yecies is in good company. When I spoke with Dropbox CEO Drew Houston in October, he explained that his company wants to integrate with everything from mobile phones to automobiles so users are never without their data.

Collaboration sells … but who’s buying?

Who a cloud-based collaboration provider is selling to does affect how they build their products. Whereas Dropbox and SugarSync focus on consumers and small businesses, Box has its eyes set on the enterprise, which brings about a whole other set of concerns.

Levie said Box spends “a disproportionate amount of time on all things security” because it’s such an important issue for large customers. However, Box has to approach security with collaboration in mind. And it has to keep in mind that many people will access files via mobile devices. That means lots of technology around access control and permissions, as well as partnerships with mobile security providers to ensure that the devices themselves are secure.

As Box tries to further penetrate the Fortune 500 next year, Levie said the company will likely roll out professional services and find strategic partners that can help it get traction in specific industries. Additionally, he said Box has to keep working on how to let users secure, manage and administrate the service at large scale. Proctor & Gamble, for example, deployed Box across 18,000 seats earlier this year, and Levie expects more deals like that to come down the pike.

Yecies says Box can have the enterprise and all the additional work it entails … for now. About half of SugarSync’s customers are businesses, she said, but they tend to be small businesses or those without central offices that gain the most out of moving to a cloud-based storage platform. It’s not that SugarSync skimps on security or on making its service function properly, it’s just that processes such as integrating with enterprise systems and direct sales necessarily require a lot of resources that might not be worth a small company’s time early on.

She has received something like a vote of confidence from some major financial-services IT executives, however. They thought the service was wonderful, she said. And they saw real value for managing mobile employees and other front-of-house workers who need to access and collaborate on documents, and who don’t deal with the bread-and-butter investment work. But as for the guys on the trading floor, the execs said “we’d go so far as to block your website from their machines.”

Aren’t we forgetting someone?

Of course, one would be remiss to talk about Box, Dropbox and SugarSync as if they exist in a vacuum, free of competition. Large providers such as Google (s goog) and Microsoft (s MSFT)  are very real threats in collaboration, and both have the knowledge and resources to go after both consumers and enterprises. They also have the added benefit of being attached to popular document-editing and email programs.

Even VMware (s vmw) is getting into the act with its Project Octopus offering detailed at VMworld in September. Yecies thinks VMware could lure a lot of business users away from her product and others, but only if it takes the lessons from consumerization that have helped propel Box and Dropbox into the stratosphere and doesn’t build something that looks like enterprise software.

Box’s Levie is confident that today’s startups will lead the way in collaboration, though, as well as across the IT landscape. In part, that’s because startups are inherently more free to innovate than are their larger competitors. However, he said, it’s also because startups — like users — often don’t have allegiance to their own platforms like Google, Microsoft and VMware do. While they build services that align tightly with their other products and even devices, cloud-based startups will just keep working to improving their services across all platforms.

Feature image courtesy of Flickr user joguldi.