Box buys small security startup to court more risk-averse clients

Fresh off its IPO in January, Box has made its first acquisition of the year, buying a small security startup called Subspace, the company said on Wednesday. Financial terms of the deal were not disclosed, but all seven Subspace employees will be joining Box and the startup will be closing up shop by April 3.

Subspace touts a supposedly secure browser that connects to a corporate network, whether it be on-premise or cloud-based. The browser is hooked up to the Subspace cloud-based backend where an organization’s IT staff can control access and craft data-protection policies for the websites and applications that a user might visit within the Subspace browser.

?In a blog post on the acquisition, Box CEO Aaron Levie wrote that the Subspace staff will be working on Box’s data security efforts and “will let us go even deeper with our security and data policies, enabling reliable corporate security policies, even when content leaves the Box platform to be accessed on a customer or partner’s device.”

As [company]Box[/company] continues to push its new Box for Industries product lineup, its going to need more security features to court customers who may be paranoid of cloud offerings. The types of customers Box wants to sign up for Box for Industries are the types of clients found in heavily-regulated industries like healthcare, finance and legal. So far, Box has made public that Stanford Health Care, [company]Eli Lilly[/company], T Rowe Price and Nationwide Insurance all feel comfortable with using Box as their work/cloud storage hub.

In February, Box rolled out the Box Enterprise Key Management (EKM) service, which lets users hold on to their encryption keys while using the Box platform. Box partnered up with the company SafeNet as well as [company]Amazon[/company] Web Services to help customers set up the service.

Dropbox’s Project Harmony aims to make Office docs easier to edit

As this past summer showed, all the big cloud players are gung-ho on workplace collaboration. After all, if you’re already storing tons of documents, it makes sense to layer features on top of those files so that people will stick with your product and not bail to another system. And so in that vein, Dropbox on Thursday said that its Project Harmony work-collaboration tool is now available in early access for Dropbox for Business customers.

Project Harmony basically lets users share notes, comments and edits with each other on [company]Microsoft[/company] Office-related programs like Word and Excel. The idea is that having a collaboration tool built on top of Office will significantly cut down on the amount of emails a team might send to each other when working together on a single document, like a Powerpoint presentation, explained Dropbox product manager Matt Holden.

Now, an organization can add team members to a specific Powerpoint document so that only those specific people are the ones able to edit it.

Dropbox Project Harmony presentation figure

Dropbox Project Harmony presentation figure

A Dropbox icon should appear on all Microsoft files so that users can keep tabs of who is editing and should be able to see a “full history of the document” that includes any changes made, explained Holden.

“If she starts making a change we can automatically detect that and broadcast it,” said Holden.

Dropbox Project Harmony figure 2

Dropbox Project Harmony figure 2

Dropbox Project Harmony figure 3

Dropbox Project Harmony figure 3

The collaboration tool currently supports different operating systems like Windows and Mac OS. As of now, Project Harmony only works with Microsoft applications, which makes sense considering Dropbox partnered up with Microsoft in early November to make sure Dropbox works well with Office.

In regards to the Dropbox for Business API that was unveiled last week, Holden said that Project Harmony is separate from the API, but hinted that the two could eventually be linked, which would let users build business apps that have collaboration abilities.

Project Harmony should be available for all Dropbox for Business customers early next year, he said.

Box updates its S-1 filing with more revenue, less loss

Box updated its S-1 filing on Wednesday to reflect its most recent financials for the third quarter of its fiscal year, which ends on January 31, 2015.

Box has grown its revenue since last year with the company taking in $153.8 million compared to last year’s $85.4 million for the nine-month period ending October 31. Its net loss went down from $125.2 million to $121.5 million during that same time frame as well.

The startup is still spending a lot on sales and marketing with the company taking in $152.4 million compared to last year’s $124.1 million.

While the numbers are better than they used to be, Box is still being quiet when it comes to going public.

A Box spokesperson wrote to Gigaom: “Our plan continues to be to go public when it makes the most sense for Box and the market. As always, investing in our customers, technology, and future growth remains our top priority.”

Here’s a look at some of its numbers:
Screen Shot 2014-12-10 at 3.36.31 PM

The company claims that it now has 32 million registered users, which is up from March’s S-1 filing that logged in 25 million registered users. It’s also now saying it has 44,000 paying organizations as opposed to the 34,000 paying organizations it said it had in March.

In November, Box CEO and co-founder Aaron Levie told Bloomberg Television that the company “should not have filed when we did.”

Listen to Levie’s thoughts on competition in the cloud space and the API economy on an August episode of the Structure Show:

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Story developing

Dropbox to unveil its Dropbox for Business API as lawyers rejoice

Dropbox will launch its Dropbox for Business API on Wednesday, allowing developers to create enterprise-oriented applications on top of Dropbox. The startup also said that it now has 100,000 Dropbox for Business companies, which includes organizations like Hyatt Hotels Corporation, Massachusetts Institute of Technology and Spotify.

SugarSync is ending its free plan, Bitrix24 increases storage for Professional plan

SugarSync, the well-known file sync-and-share application, has announced that it will be discontinuing ist5 GB Free Online Storage – free 5G storage plan, effective 8 February 2014.

The CEO, Mike Grossman said

There are many companies in this space that are giving away free storage. However, most of these companies will not be viable. We are already in a solid financial position and this shift will further strengthen our business.

Perhaps this is a sign of the growing maturity in the marketplace for file sync-and-share, and another proof that it has become the distributed core of today’s computing model (see Hightail raises $35M: the file sync-and-share market is red hot for a detailed discussion of the distributed core architecture). There a small number of market leaders — like Hightail, Box, SugarSync, and Dropbox — and offerings that directly compete or overlap from Microsoft, Google, and Apple, so there is increased competitive pressures among the leaders, but no real challenge from new tiny start-ups, perhaps.

There certainly is room for specialized players, like Interlinks VIA and RR Donnelly’s Roundtable, whose background in the world of highly confidential information in financial services, deal management, and corporate boards provides them a community they have deep connections with, a community concerned about the consumer-oriented features of many of the other players.

However, it looks like the days of zero cost file sync-and-share may be coming to a close, at least for companies who are increasingly servicing enterprise customers, or people whose needs are way beyond 5G’s of storage.

In related news, Bitrix24 has announced a number of upgrades to its work management solution:

  • Bitrix24.Drive, the company’s file sync-and-share solution, now offers 1T of storage for companies using the Professional plan. Note that Bitrix24 still offers a free plan, and both personal and company files can be managed at the same time, similar to a recent announcement by Dropbox (see Dropbox for Business is only the start: next, work management and office apps).
  • Bitrix24’s CRM now has its own activity streams, and new reporting options. An integration with Zingaya’s VoxImplant brings integrated VoIP calls right into the CRM.
  • Bitrix24’s Project Management and Time Management modules are more integrated, and a new Task Counter watches for tasks and projects that may run late.
  • Mobile apps have been improves and an integration with Mailchimp is now available in the Bitrix24 markeplace.

The analysts don’t get Dropbox, now raising $250M on an $8B valuation

Ashlee Vance is reporting that Dropbox looking to raise $250 million on an $8 billion valuation, trying to fuel its new push into the enterprise. This is a turn that will require deep pockets to feed an enterprise sales team and build out the office and productivity products the company is hinting at (see Dropbox for Business is only the start: next, work management and office appsDropbox hires Ross Piper from Salesforce to speed enterprise adoption, and Dropbox acquires Mailbox).

According to here sources, Dropbox just passed 200 million users, which 10 times as many as in 2010, and revenues are now in the hundreds of millions.

But the analysts don’t see what is going on, right in front of their eyes.

I am reminded of the Jim Dators saying, that any useful idea about the future should appear to be ridiculous, so here’s a useful observation about the near future.

The media seem to think Dropbox is a just about file sync-and-share. Now, first, let me qualify that file sync-and-share is the distributed core of today’s new computing model, which is intrinsically social. A distributed, sharable, bottom up, virtual file system that solves the glaring errors of the dominant operating systems today: OS X, iOS, Android, and Windows. None of those OSs have a built-in distributed file system, and if they did, they would probably be non-interoperable. All of those OSs are still based on a model of computing where the web is mostly an afterthought, principally accessed through the browser, and accessing information on other machines still requires specialized apps.

Dropbox, Box, Hightail, Intralinks, and other file sync-and-share apps are making the inroads they have — running on billions of computers, now — because of this core flaw in our OSs, but I have yet to see one of the mainstream media consider that.

And Dropbox is now barreling ahead with building that virtual distributed OS layer — missing on all the platforms it supports — and now will be building a family of applications that play well in that world. They’ve acquired Mailbox, and have so far been content with just iOS versions of that. Recent interviews have suggested that the company is not only planning to sell fine-sync-and-share to the enterprise, but is moving ahead with other enterprise applications, like productivity (Office) tools. This will bring it in competition with Google, Apple, and Microsoft, with their office-in-the-cloud offerings.

Dropbox is likely to be the small player that comes from left field, growing like a 21st century South Pacific typhoon and smashing the old school pre-mobile enterprise computing market to bits. They may not be the only one too. Established players like Microsoft’s Yammer, Salesforce Chatter, and IBM’s social tools suite may find themselves challenged and then overturned by new, smaller players like Dropbox that reject the conventions of project- and group-based collaboration tools, and instead model themselves after lightweight chat tools or task management apps based on flat and agile business principles.

No matter what else, Dropbox’s rapid ascent once again has shown that the established player can be blindsided — despite having all the apparent advantages — by agile outsiders that find a way to dramatically take the friction out of the current way of doing things with an easy-to-use and inexpensive alternative.

Dropbox is becoming the Amazon of the enterprise software world, and today’s market leaders may soon look like Barnes & Noble or Borders.