2014-05-September-Buy-of-the-Week.jpgInspiration comes from strange places. Last week on the radio I heard a DJ talking about how he still uses his VCR (for those of you that are too young to remember, that is what preceded DVRs). My first memory of VCRs was in a commercial that ran during an interview with Ronald Reagan. Although I was too young to understand the point, Reagan spent much of the interview discussing how we must rebuild our military, which was later branded by pundits as another “Arms Race.” Hence the name for this post. But back to the VCR ....

In that commercial, the VCRs were advertised for upward of $500 (that’s around $1000 in today’s money), but as more options came out, prices started falling. When DVDs came out, VCRs dropped under $100 and it seemed that they would soon be relegated to the scrap heap next to record players. Yet many households still have VCRs (and record players). Mine is disconnected, sitting in a cardboard box and likely doesn’t even work, but I am not throwing it away. The thing is, I still have a lot of tapes. Between kids’ birthday parties, family dinners and even videos of my old dog, I feel better knowing it’s there.

Cloud-based storage (and Drives in particular) share many similarities with VCRs.

A Work Around

When cloud-based storage first appeared, it was expensive and confusing to use (that never changed with VCRs). You basically paid for the amount of storage but it was complicated and slow to upload content into these systems. As vendors tried to lure customers and storage prices fell, we began to see consumer products like Dropbox offer customers some free storage (around 2GB to start with), and a much more simplified loading mechanism.

I still remember the first time I used the service to share several 100 vacation photos with some friends. A light bulb went off! Gone were the days of setting up FTP servers or having to bring a physical drive to someone to accomplish this simple task. It was so easy and convenient that I started using the service to share documents, presentations and spreadsheets with co-workers and partners. And as we know, I was not the only one. Since many IT organizations limited the size of email attachments, services like Dropbox, Box, Google Drive and SkyDrive (predecessor of OneDrive) started to appear on business computers to fill this need.

Ease of use got people hooked, but another motivation prompted business users to jump onboard. Organizations spend a lot of time and money protecting their content and since it is not easy to decipher what is and is not confidential, they casted a wide net. Investments were made into Data Loss Prevention (DLP) and content management systems, like SharePoint, that were not just designed to share content, but also to make sure that this content does not fall into the wrong hands. Drives allowed users to bypass these systems (and IT), and share content when and with whom they saw fit. Drive vendors certainly took notice and the “Drives Race” was on.

Drives, the VCR of Tomorrow?

Fast forward to today. Storage prices have fallen so sharply that the majority of drive vendors are offering up to a terabyte of storage for just a few dollars a month. Corporate IT has finally started to adopt the approach of “if you can’t beat them, join them” and rather than blocking access to cloud storage, they are trying to manage it.

As with the “Arms Race,” I believe the “Drives Race” will come to an end and there will likely be winners and losers. From the perspective of business, the differences in capabilities between Drive vendors are quickly narrowing.

If Drives become a commodity (which is practically the reality now), customers will evaluate their options based on price and additional value proposition. In that light, no one is better positioned than Microsoft. Putting their string of blunders aside, Office 365 is a winner. For a reasonable price you get Exchange, SharePoint, Lync, Yammer, OneDrive and the Office apps that are still the standard in most organizations. Corporate IT can manage all these services from a single portal and the cost of managing the underlying hardware is practically gone.

Google should also be put in the same winners circle. Besides Google Drive, they offer Gmail, Google Sites, Hangouts and Apps. Google deserves credit not only for innovation but doing an exceptional job of appealing to niches that Microsoft has either ignored completely or not valued very highly. A couple examples of these are small businesses and schools. At this stage in the race, I feel that Microsoft has more to offer than Google, but small businesses grow and mature and the leaders of tomorrow are in schools today ….

Dropbox and Box have some unique advantages in terms of ease of use and management capabilities respectively, but those advantages are likely to disappear over time as competitors improve their offerings. Both companies will need to adapt and adjust in order to overcome the integrated solutions from Microsoft and Google. We’re seeing some of that adaptation take place with the recent announcements from Dropbox and Box about more attractive pricing and added services. With Dropbox Pro now giving users one Terabyte of storage for $9.99 a month, and Box announcing integration with the desktop version of Office 365 as well as new features like Box Workflow, it’s clear that they’re taking notice of the juggernauts on the horizon.

Are Drives destined to go the way of the VCR? The answer is yes and no. Just like my old videos, there is a lot of valuable content in Drives. Last year my wife took on the responsibility of slowly converting our valuable VHS tapes to digital videos. The same process will need to be done with legacy Drive systems.

As Drive vendors consolidate, the winners will need to offer a convenient way for customers to onboard their content and manage it there. However, unlike VCRs, I think Drives are here to stay. They have not only proven their value and convenience to users, but with enhanced management capabilities and potential for reducing IT costs, businesses are also on board.

Title image by Devlin Thompson (Flickr) via a CC BY-NC-ND 2.0 license