Box is declaring the end of the cloud storage pricing war.
Or so it hopes.
The Los Altos-based cloud computing company announced Tuesday is would not longer set limits on cloud storage for businesses that buy its services. All companies get unlimited space in the cloud to store, manage, transfer and collaborate on big files when they buy Box s package of services for $35 per month per user.
Throughout the first half of this year, technology giants have competed in what seems like an arms race of gigabytes. In just the past few weeks, Google, Microsoft, and Amazon have significantly increased cloud storage allotments for their customers. And today, we re happy to share that Box is removing storage limits for our Business customers, Box Co-Founder and CEO Aaron Levie wrote in a blog post.
Box s announcement is a direct response to Google, Microsoft and Amazon, which in the past few months have slashed the price of cloud storage, creating a race to the bottom between tech giants and startups competing to get the most companies to move to their cloud. As a result, cloud storage has become a commodity that is given away for free or nearly free; Levie said the cost of storage has dropped by a factor of more than 22,000 over the last two decades.
Box has been working for the last seven years to pivot away from a cloud storage company whose revenue depends on companies paying for storage, and has rolled out programs that help businesses manage and send big files throughout the company, encrypt sensitive data and add meta data to big files.
On Tuesday, Box also announced a new integration program between Box and Microsoft for customers using Office 365.
They way to make money is to sell services on top of storage, said Randy Chou, CEO and co-founder of Campbell cloud services company Panzura. Cloud storage is virtually free.
But Box can t out-price the tech giants: Google announced this month it is offering two terabytes of free storage for a year through a partnership with Panzura, and it offers companies Google Drive for Work with unlimited storage for $10 per user. Amazon announced this month a new cloud service called Zocalo which has 200 GB of storage for $5 per month per user.
Box has been scrambling to improve its financials before going public; the company filed for an IPO on March 24, but has delayed pricing. An updated SEC filing shows Box lost $158.8 million last year, a 45.6 percent increase in losses from the year before. While it s normal for software-as-a-service companies to have cash burn until they build up a subscription base, Box s far exceeds other companies . However, its revenue in the first quarter was $45.3 million, up 94 percent year over year, and since March the company has added 5,000 new paying customers, including big names such as Toyota.
San Francisco-based Dropbox shares similar challenges, as its revenue depends on users upgrading storage and paying for it, which few are willing to do anymore. It also has a stronger focus on consumers than businesses, and some experts say a Dropbox acquisition by a larger tech firm is likely in the company s future.
Image courtesy Box
