Amazon
Today Amazon introduced a new file storage and collaboration service called Zocalo that—on first blush, at least, looks like it might be a Dropbox killer. Much like Dropbox and other cloud storage services, Zocalo lets you sync files between the Amazon cloud and your phone or PC. It has a business twist too, helping IT staffers control who gets access to which files.
The product must be making some Dropbox executives uneasy, because unlike its other big competitors—Google and Microsoft— Dropbox itself is a pretty big Amazon customer. The startup uses Amazon’s S3 storage service to store the more than 500 million files that get uploaded to Dropbox each day.
That’s going to make it pretty much impossible for Dropbox to undercut Amazon’s pricing. Zocalo starts at $5 per user per month for 200GB of storage. Dropbox charges twice that for half as much storage.
But price isn’t everything, and Dropbox still has a several advantages that Amazon will be hard-pressed to overcome.
1. Sync is incredibly hard to get right
Dropbox’s greatest strength is that it makes syncing files with the cloud and sharing them with other users seem so easy. But it’s not. Behind the scenes, Dropbox has a vast system of software keeping track of which files have been edited when, and who has access to what. Sync is a particularly difficult problem, and one small bug can lay waste to years of important user data. Err the other way, and you’re constantly resurrecting long-deleted files.
Amazon has the technical chops to build a reliable storage and synchronization system, but making it as invisible to the end-user as Dropbox is no easy task. Dropbox has a seven-year head start here. And customers have shown, again and again, that they’re actually happy to pay more money for a tool with fewer features as long as it’s easy to use.
2. Dropbox’s “users first” strategy
Dropbox’s strategy has always been to win end-users over first, then sell to the business side. Amazon is taking the opposite approach, by appealing directly to businesses. The problem with this approach is that even if Amazon is successful in selling its service to a business, the managers of that business still have to convince their employees to use it. Employees who are already Dropbox might not want to make the switch — especially if Zocalo ends up being even slightly harder to use than Dropbox.
Could Amazon appeal directly to end users in this space? It already tried that with Amazon Cloud Drive, which is still around, but has been largely forgotten since its 2011 launch.
3. Branding
Amazon already has a dizzying number of services and features under the Amazon Web Services umbrella, and it can be hard to keep track of them all. And the company is always adding more. That means it could be easy for the product to be overlooked, much as Cloud Drive has.
That’s made all the worse by the name Zocalo. In Spanish, Zócalo means “plinth,” which is a platform for pillars or statues. It can also refer to the Plaza de la Constitución, the public square in the center of Mexico City. Unfortunately, it’s not a word that means much to non-Spanish speakers, and it’s particularly hard to remember. Bu now, just about everybody knows about Dropbox.
Independence Ahead?
Of course it’s not all smooth sailing for Dropbox and other competitors. This move will put pricing pressure on Dropbox, and it may need to spend some of $1.1 billion it’s raised on gaining more independence from Amazon. Startups are always in danger of being squashed by larger companies and bigger marketing budgets and the ability to undercut them on cost. But that problem is magnified when you’re running your service on infrastructure owned and operated by the same big companies you have to compete with. We’ve already seen this with Amazon Prime, which competes with Netflix, another major Amazon Web Services customer.
But Amazon is still a long way from killing Netflix, and that’s good news for Dropbox.
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