Download Dropbox it works

Dropbox: “It just works”
Ashan-wa Aliogo
Qualitative
Customer Value Proposition
-Clear product/unmet need: Seamless
synchronization of documents between personal and
shared computers that works online and offline, isn’t
buggy. Cloud storage + ease of use=competitive
advantage
-Both B2C & B2B: targeting “power” users +
businesses. Provides a larger target market but
introduces dilemma of which group and features to
prioritize.
-Good customer reception: Vote Box allowed for
direct feedback from users and testing new features.
Simultaneously building and learning from
customers.
Go-to-Market Strategy
-Freemium/Premium model: Users can fully
experience the product compared to competitors.
Conversion difficulties. Prices are not as competitive:
$5/month/10G vs approx $4.58/month w/ unlimited
storage (Carbonite).
-Partnerships through pre-installation on portable
devices like Android. Good but dependency is risky
especially if Google releases in-house version of
cloud storage
-Organic Growth (virality + word of mouth) due to
high customer acquisition cost. Model works for B2C
but marketing is needed for B2B expansion.
Technology & Operations Management
-No business development team: challenges
expansion to B2B and release of new product lines.
Too dependent on word of mouth/virality.
Profit Formula
-Rapid expansion required to increase barrier entry
from top competitors like Google and lock in
customers.
-Valued based on ease of use therefore quality user
experience is key.
Quantitative
Premium vs Freemium costing + Marketing
-$5.12M/year in cost from freemium users but $0 annual revenue.
-$4.6M/year in cost from premium users and $10-$15million annual revenue.
-Profit ranging from $300K-$5.3M annually
-Costing does NOT include marketing costs due to reliance on viral marketing + word of mouth +
lack of business development team.
-Top competitor Carbonite incurred $14.2M in debt due to marketing efforts to breaking in B2B
space therefore Dropbox will more likely have to spend more to switch over customers + combat
native competition due to high risks involved like data corruption and destruction.
-As of now they have not perfected their B2C customer acquisition funnel as acquisition is still
very, very high (approx. $300/paying client compared to $99/year on premium service).
Ranking
-Yet to dominate niche: Ranked 6th in consumer backup meaning competitors still have key
features that make them preferable despite Dropbox’s ease of use and “sexiness”.
Recommendation
• Do not venture in B2B product.
– Marketing/advertising/Conversion expenses (an inevitable cost) will
be too high with their current margins.
• Especially since they have little experience in advertising.
• Work on improving the acquisition funnel, increasing conversion rates, and
expanding profit margins.
• Be more aggressive in recruiting a business development director.
– Venturing into this field will increases competition and can distract
the team from dominating the consumer backup market.
• Head to head competition will be very difficult especially with no business
development director. They can’t be reliant on viral marketing or word of
mouth in B2B as risks are a lot higher. Strategy needs to be thoroughly thought
out.
• Continue to improve UI and product features to become more competitive
within the consumer backup niche before branching out.
• Better to be exceptional at one thing than mediocre at several.