Box Private Vendor Watchlist Profile: Cloud - Based Content Collaboration Services Enabling Enterprises to Move Tow ard Next - Generation Collaboration
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Box Private Vendor Watchlist Profile: Cloud - Based Content Collaboration Services Enabling Enterprises to Move Tow ard Next - Generation Collaboration

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Box Private Vendor Watchlist Profile: Cloud - Based Content Collaboration Services Enabling Enterprises to Move Tow ard Next - Generation Collaboration
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  • 1. VENDOR PROFILE Box Private Vendor Watchlist Profile: Cloud-Based Content Collaboration Services Enabling Enterprises to Move Toward Next-Generation Collaboration Laura DuBois Ryan Patterson Bharath Regula IDC OPINIONwww.idc.com Box is a cloud-based content management and collaboration service provider that enables businesses to securely share, manage, and access content online across multiple devices such as PCs, tablets, and smartphones. The company, headquartered in Palo Alto, California, has over 7 million users and is growing quicklyF.508.935.4015 in the file synchronization and collaboration market. Box provides a simple, easy-to- use interface to manage content online, focusing on common business needs such as file share, content-centric collaboration, and secured access to data with detailed reporting. Boxs partnerships with various enterprise systems and content management providers as well as supportability on all major platforms makes Box anP.508.872.8200 attractive option for enterprise and small and medium-sized businesses to meet next- generation collaboration and file management needs. We believe Box is a company to watch because of the companys:  Fast-growing customer base with focus on business professionals and meetingGlobal Headquarters: 5 Speen Street Framingham, MA 01701 USA the enterprise requirements for security and scale  Extensive content management features that eliminate the necessity of multiple IT tools, simplifying the job of IT administrators in providing the support  Participation in several market categories where public cloud services are disrupting traditional on-premise offerings from file management (e.g., managed file transfers and FTPs) and storage to content and collaborative applications  Growing partnership ecosystem bringing Boxs cloud capabilities to many commonly used enterprise applications such as salesforce.com, NetSuite, Jive, Yammer, Google Apps, and SharePoint IN THIS VENDOR PROFILE This IDC Vendor Profile analyzes Box, a company playing in the public cloud advanced storage services market and the content management and collaboration market, and reviews key success factors: market potential, technology/solution, corporate strategy, force multipliers, and customers. Leveraging IDCs expert understanding of the competitive landscape and future outlook, this document highlights company and market information tailored to the investment professionals needs. Filing Information: October 2011, IDC #230624 Private Vendor Watch Service: Vendor Profile
  • 2. SITUATION OVERVIEWCompany OverviewBox, based in Palo Alto, California, was founded in 2005 based upon a simple idea tosecurely access, share, and manage content easily across multiple devices. Thecompany has now reached over 7 million registered users serving consumers, smalland medium-sized businesses, and enterprise companies. With 100,000 businesscustomers, Box is one of the popular content management solution providers forcompanies looking for lightweight content management and collaboration. Thecompany competes in the public cloud advanced storage services market as well ascontent and collaborative applications market.Company details are provided in Table 1. TABLE 1 Box Company Snapshot Category Details Functional and secondary markets  Public cloud advanced storage services  Content and collaborative applications Founding year 2005 Number of employees Approximately 300 Number of customers Over 7 million Company location Palo Alto, California Web site www.box.net or www.box.com Funding initiatives Not currently seeking Investors Salesforce.com, SAP Ventures, Bessemer Venture Partners, NEA, Meritech Capital Partners, Andreessen Horowitz, Emergence Capital Partners, Draper Fisher Jurvetson, U.S. Venture Partners Sales channels Both direct and indirect Revenue estimate Box does not disclose, but IDC estimates annual revenue of under $50 million Source: IDC, 20112 #230624 ©2011 IDC
  • 3. IDC Watch Factor ScoresIDC Watch Factor scores measure private companies based on a set of five definedsuccess factors. Each of the five key success factors is made up of detailedsubquestions, which are assigned a value from 1 (weak) to 4 (strong). The average ofthe subcategories is then applied as the overall score for each category: Market potential: Market growth potential, strength of competition, and current stage of market (early adopters versus late majority) Technology/solution: Level of differentiation, disruptive capability, and scalability Corporate strategy: Go-to-market strategy, management pedigree, and financial status (running on venture capital with insignificant revenue versus self- sustaining and not seeking additional rounds of funding) Force multipliers: Current partnerships/certifications, additional partnerships likely within the next two years, and channel/sales strategy Customers: Number of existing customers, quality of existing customer base, geographic reach, and size of addressable market in the coming years given the vendors current capabilitiesFigure 1 shows the Watch Factor scores for Box versus the Watch Factor averagescores for all companies ranked by the Private Vendor Watch Service in theapplicable market at the time of publication. The sections that follow detail thereasons for those scores.©2011 IDC #230624 3
  • 4. FIGURE 1Box Watch Factor Score Versus Watch Factor Average ScoreNotes:The Watch Factor average score reflects the average score for all private companies scored bythe Private Vendor Watch Service at the time of publication.Scores are based on a scale of 1 to 4, where 1 = weak and 4 = strong.Source: IDC, 2011Market PotentialMarketBox competes in the public cloud advanced storage services market segment andspecifically the file sharing, file synchronization, and backup services segment, whichIDC has sized to be a $724 million market in 2009. IDC expects the segment to growto $2.5 billion by 2014, representing a 28.2% CAGR. This market is still in an earlyand nascent state and is predominantly being capitalized on by small innovative start-ups. The company does not disclose revenue, but IDC estimates Box has an annualrun rate of under $50 million in revenue.By providing simple to use yet secure cloud content and collaboration services, Boxalso disrupts the established markets in the content and collaborative applicationsmarket segment. IDC has sized this segment to be about $30.3 billion in 2009,growing to $41.5 billion by 2014. Boxs easy-to-use file management andcollaboration solutions fit the needs of enterprises that are looking for a lightweightsolution that is quick to deploy and brings faster time to value.Box is growing on an average of 200–300% per year and has seen a 75% increase inaverage deal size within the last year. The enterprise business segment has beenone of the fastest-growing segments for Box. IDC estimates 80% of Boxs revenue isderived from business customers while 20% of revenue is derived from consumers.Boxs solutions are well positioned for both consumers and business segments thatare looking for innovative and easy-to-use file management solutions.4 #230624 ©2011 IDC
  • 5. Market DisruptionAdvanced public cloud storage services (e.g., backup, file sharing, file synchronization,and archiving and replication services) are all cannibalizing or impacting traditionalstorage software license sales. IDC research suggests firms will continue to shiftspending to public and private cloud offerings over the next five years.Boxs cloud-based file management solution consolidates various business needssuch as file sharing, next-generation collaboration, and enterprise mobility, bringing ina comprehensive solution that is highly disruptive to adjacent markets in content andcollaboration. Boxs easy-to-use interface, wide variety of content managementfeatures, and partnership with various enterprise applications make it a uniqueproduct that is particularly attractive to enterprise business as well as consumers andsmall and medium-sized businesses.Competitive LandscapeBox competes with various companies depending upon the use case it is serving.Two of the biggest use cases for Box are file sharing and next-generationcollaboration. While Dropbox, Egnyte, Syncplicity, and MobileMe compete with Box infile sharing and mobility space for consumers, on-premise solutions such asSharePoint compete with Box for advanced collaboration services. Presently Dropboxowns the largest mindshare in the market as a popular consumer choice for filemanagement. Potential development and offerings by EMC Mozy and Symantecwould shake up this market.M&AThis market space is still very nascent, and there has not been any material M&Aactivity in the core market although adjacent markets of SaaS-based backup andcollaboration have seen M&A activity. However, traditional technology suppliers arelikely to make, build, or buy decisions that could drive future M&A activity, inparticular, those with material user adoption.Table 2 displays recent M&A deals in the SaaS market. TABLE 2 SaaS M&A Deals Date Acquirer Target Company Deal Value ($M) Specific Market/Solution Type September 2007 EMC Mozy 76 SaaS backup May 2011 Limelight Networks Clickability Unknown SaaS Web content management April 2010 Salesforce.com Jigsaw 142 SaaS sales May 2010 SuccessFactors CubeTree 20–30 SaaS collaboration Source: IDC, 2011©2011 IDC #230624 5
  • 6. Technology/SolutionBox is a cloud-based content management and collaboration platform that offers asimple, easy-to-use interface for its users to securely share, access, and managedata across multiple devices. Its key services include content management services,collaboration and sharing services, enterprise mobility, and secure deal rooms.Boxs cloud-based content sharing services eliminate the need to use different filesharing solutions that a company typically employs, such as FTP, NFS, or MFT. Toenable users that prefer to work on the files directly on the desktop, Box provides adesktop client that automatically synchronizes the content in the cloud. Content placedin Box is encrypted and indexed for full-text search. Other important featuressurrounding content management include full library services, including version control(check in/out) and controlled access (document-level and folder-level security).Collaboration in conjunction with file sharing has become very important to the currentgeneration workforce. Box provides a content platform that is rich in collaborativefeatures. Its robust content preview technology allows users to preview all types ofdocuments and rich media files directly in the browser. Users can discuss, comment,and see activities, creating a social experience. For more secure and confidentialcollaboration, Box provides secure workspaces that facilitate confidential deals suchas mergers and acquisitions, client engagements, and other highly secure document-centric transactions.Todays workforce is increasingly mobile. Sales forces and field workers areincreasingly finding the need for mobility, as are users in the regular workforce whoprefer to have access to the data and work on it from anywhere. Boxs solution issupported in more than 10 mobile platforms and works on different devices such astablets, laptops, and smartphones. To provide a rich user experience, Box built itsmobile applications using the native API of the platform. Box is integrated with over150 enterprise applications, extending the value of those applications by providingmobile access and sharing features. Some of the prominent enterprise applicationsthat Box has partnered with are: salesforce.com, NetSuite, Jive, Yammer, VMware,Ping, Okta, MS Office, EMC Documentum, IBM FileNet, and MS SharePoint.Box provides comprehensive administrative capabilities and strong security featuresto securely manage activities. Boxs administrative console allows an administrator atthe customer organization to manage users, monitor activities, and customize and setsecurity policies for the account. Security is one of the biggest concerns in usingcloud services. Box addresses those concerns by facilitating secure file transfer,using 256-bit SSL encryption. Boxs cloud data is managed in two different colocationdatacenters where the servers used are managed and owned by Box.Customers using Box are charged based upon the subscription plan they subscribeto. A free subscription is available for anyone with 5GB of storage and basic filesharing capabilities. The free subscription is mainly targeted toward consumers forpromotion of the Box solution. The business and enterprise subscription plans unlockthe full potential of Boxs capabilities and cost $15 per month and $25–35 per month,respectively, depending on needs and volume.6 #230624 ©2011 IDC
  • 7. Corporate StrategyLeadershipBoxs cofounders, CEO Aaron Levie and CFO Dylan Smith, transformed Box from acollege project to a successful online collaborative platform.Dan Levin, the chief operating officer, came to Box from Intuit where he wasresponsible for QuickBooks-branded small business products and services. Prior toIntuit, he spent nine years as a senior executive leading various venture-backed start-ups.Enterprise General Manager, Whitney Tidmarsh Bouck, and Jen Grant, vice presidentof marketing, bring marketing and sales experience from large-scale enterprisecompanies. Bouck and Grant help Box to promote its products to enterprise and smalland medium-sized businesses.Jon Herstein, head of customer success, recently joined Box from NetSuite, andChris Yeh joined as a vice president of Box platform. Yeh most recently ran theYahoo! Developer Network.Overall, Box has well-rounded leadership experience to drive the company toward itsgoal to become a leader in the cloud-based content and collaboration platform andthe advanced storage market.Go-to-Market StrategyBox has a three-pronged strategy to attract consumers, small and medium-sizedbusinesses, and enterprise businesses. The company provides free subscription for5GB of storage mainly targeted toward consumers and relies strongly on viralmarketing and word-of-mouth communication to attract more consumers. To reachvarious medium-sized companies, Box is partnering with various value-addedresellers. Box launched its new Certified Reseller and Solution Providers programswith over 30 new partners including Appirio, WEBR, Board Tools, HEDLOC, andPCMall. In addition, Box has developed a number of technology partnerships withvendors including Citrix, DocuSign, EMC Documentum, Google, HP, Intuit, Jive,MobileIron, NetSuite, Ping Identity, RIM, salesforce.com, Samsung, SugarCRM,VMware, Yammer, and Zoho. Box Apps Marketplace currently has 150+ applicationsthat are integrated with Box including Google Apps and Google Docs, DocuSign,Quickoffice Connect, LinkedIn, AutoCAD, FedEx, DocsInOffice.com, and Tagle. Boxis heavily investing in increasing its sales team to directly reach to enterprisebusinesses.Exit StrategyBox is executing its strategy well but needs to continue to demonstrate revenue andcustomer traction as it penetrates the enterprise software market. The company isfocused on promoting its solution as offering more advanced storage services thanmere cloud storage such as file sharing, collaboration, and data protection.©2011 IDC #230624 7
  • 8. Key AcquisitionsBox has not made any acquisitions.Current InvestorsBox is not currently seeking funding.Table 3 displays a detailed funding history for Box. TABLE 3 Box Detailed Funding History Round Date Amount ($M) Investors A October 2006 1.5 Draper Fisher Jurvetson B January 2008 6 U.S. Venture Partners, Draper Fisher Jurvetson C April 2010 15 Scale Venture Partners, Draper Fisher Jurvetson, U.S. Venture Partners D February 2011 48 Meritech Capital Partners, Andreessen Horowitz, Emergence Capital Partners, Hercules Technology Growth Capital D October 2011 81 Bessemer Venture Partners, NEA, Andreessen Horowitz, and Draper Fisher Jurvetson, along with strategic investors salesforce.com and SAP Ventures Source: IDC, 2011Force MultipliersPartnersBox has partnered with various technology providers to integrate its product withvarious enterprise applications, extending their value. Box is integrated with over 150enterprise applications, with key applications including: salesforce.com, MicrosoftOffice and Outlook, Google Apps, Google Docs, DocuSign, Quickoffice Connect,LinkedIn, AutoCAD, FedEx, DocsInOffice.com, NetSuite, EMC Documentum,Microsoft SharePoint, IBM FileNet, Live Office, Jive, Yammer, Apple, Samsung, HP,Orange, Motorola, MobileIron, Good Technology, and RIM. These partnershipsenable Box to reach the large, small, and medium-sized businesses and gainpopularity among enterprise businesses. Furthermore, Box has developed channelpartnership with various resellers such as WEBR, Board Tools, PCMall, andHEDLOC.8 #230624 ©2011 IDC
  • 9. Box secured its largest deal with Procter & Gamble (P&G) where Box deployed20,000 licenses. Box is looking to develop similar partnerships in the enterprisespace.Partnership OpportunitiesBox could partner with OEMs for desktops, PCs, and servers that are shipped directlyto businesses and consumers. Having Box software preinstalled in those machineswould encourage user trials, which would promote fast adoption of Box services. AtBoxWorks, Boxs customer conference in late September 2011, the companyannounced a strategic partnership with HP for Box to be preinstalled in HPs SMB-targeted PC laptops and with Motorola for preloading Box for Xoom tablets.Channel/Sales StrategyBoxs solutions are designed for consumers, SMBs, and enterprises. Box is reachingthe consumer market directly through its Web site and relies strongly on word-of-mouth communication, viral marketing, and direct promotional activities. Thecompany is increasing its direct sales force to attain a strong growth in the enterprisemarket. Box launched its new Certified Reseller and Solution Providers programs withover 30 new partners to reach the large number of SMBs in the market.Box does not disclose its sales mix, but IDC estimates it is 90% direct sales and 10%indirect sales.CustomersKey Customers60% of the Box Web traffic and 85% of the revenue come from the U.S. market. As ofthe end of September 2011, Box had 7 million registered users and 100,000businesses actively using the service. Box signed its biggest deal with Procter &Gamble where 20,000 Box licenses are available to the global workforce of P&G.Some of the key customers for Box are: Procter & Gamble Dell McAfee Clear Channel Six Flags TaylorMade Pandora Balfour Beatty©2011 IDC #230624 9
  • 10. Key AudiencesBox markets its solutions to consumers, SMBs, and enterprise businesses. However,Box is betting its future on increasing the footprint in the enterprise market. Boxssolution is applicable to many different businesses but has strong traction in keyvertical markets with a heavy mobile workforce, commitment to cloud computing,high-collaboration needs, and/or engagement with outside parties.The strongest performing verticals for Box include: High technology Retail Manufacturing Engineering and construction Financial services Professional services Life sciences Consumer packaged goods Media and entertainmentGeographic ReachBox is currently predominantly selling its services in North America, although a largepercentage of its users are outside of this region. 40% of Box application Web trafficcomes from outside the United States, contributing to 15% of total revenue. Box plansto increase its international presence and is expected to expand into Europe in 2012.The company has also made a recent partnership with a reseller in Australia to enterthe Australian market.FUTURE OUTLOOKChallenges and OpportunitiesChallengesBox is still growing and developing its operational capabilities. To attract enterprisebusiness and maintain it successfully, Box needs to demonstrate its capabilities inperforming large-scale deployments and providing customer support.Box competes in multiple areas such as file synchronization, collaboration, and filesharing. Box is therefore competing with companies that have sole focus in thosemarkets. To remain competitive, Box has to ensure it continuously brings leading-edge innovation to its products.10 #230624 ©2011 IDC
  • 11. Brand leaders in security, storage, and information management like Symantec,EMC, and Autonomy have shown interest in participating in the market. Should thesesuppliers develop or acquire technology that is an alternative to Box, the company willbe left in a defensive position. Thus, to avoid getting edged out by larger players, it iscritical that Box develops more strategic partnerships with some of the larger softwarecompanies that are attempting to enter or have already entered the cloud storage orSaaS storage markets.OpportunitiesBox has the opportunity to OEM or license its technology to service providers, SaaSproviders, and ISVs alike. In many ways, the functions Box is offering are anextension to on-premise file storage, security, and information management offerings.Hence partnerships and investment in the platform to make it easier to build customapplications leveraging core Box content management and collaboration capabilitiesmake sense. Box could continue to grow its partnerships with various othertechnology providers, strengthening its partner ecosystem and maturing the Boxplatform to realize its vision to be the de facto storage, content management, andcollaboration platform for business professionals.ESSENTIAL GUIDANCEReason to WatchBoxs extensive feature set surrounding collaboration and file sharing withadministrative control makes Box an attractive product for enterprises. The companyhas partnered with many technology vendors to extend the value of over 150enterprise applications, enabling Box to easily demonstrate its product capabilities.Box is tied into two IT megatrends — mobility and cloud. Box is an early participant inthe emerging opportunity for connecting mobile users and a growing universe ofsmart devices with centralized IT services, data access, and cloud storage services.Increasingly, mobile devices are being brought into the corporate workplace forincreased user productivity. This introduces a challenge for IT organizations that mustprovide centralized IT controls over the devices and how users access data stored inthe cloud.DifferentiatorsBox is differentiated in the market by the following: Ability to access data anywhere from any device including mobile, tablet, and PC with an easy-to-use interface Robust content preview technology that allows users to preview all types of documents and rich media files directly in the browser Open API that enables easy integration of Boxs capabilities with enterprise applications©2011 IDC #230624 11
  • 12.  Extensive administrative capabilities to manage users, monitor activities, and customize and set security policies for user accounts to ensure auditability and complianceAdvice for IT Managers and End UsersEnterprises that are consolidating disparate file servers and modernizing technologiesfor file sharing, collaboration, and synchronization would be well served to evaluatesolutions like Box. The Box solution enables online backup, data protection, and filesync services in a way on-premise solutions do not. This solution also eliminates theneed for file servers, SharePoint, VPN services, on-premise storage, and so forth.However, when evaluating any public cloud storage service, firms should vet thesuppliers data privacy, security, and SLA terms. With recent publicly known securityattacks and unplanned downtime events, firms must place the highest levels ofscrutiny on public cloud services to ensure these solutions are not introducingunnecessary risk to their organizations.LEARN MORERelated Research U.S. Public IT Cloud Services by Industry Sector: More Details on the Opportunity (IDC #226222, December 2010) Cloud Storage Impacted by Datacenter Transformations and the Changing Role of IT (IDC #226214, December 2010) Public Cloud Business Continuity Services Remain an Underserved Opportunity (IDC #224792, September 2010) Adoption and Spending Intentions on Public Cloud Backup Services (IDC #224265, August 2010) Storage in the Cloud: Overview of Key Players and Service Offerings (IDC #224244, July 2010) Worldwide Storage in the Cloud 2010–2014 Forecast: Growth in Public Cloud Storage Services Continues as Firms Decapitalize IT (IDC #223396, June 2010) IDCs Worldwide Storage and the Cloud Taxonomy, 2009: Assessing the Opportunity from All Angles (IDC #221293, December 2009)12 #230624 ©2011 IDC
  • 13. Copyright NoticeThis IDC research document was published as part of an IDC continuous intelligenceservice, providing written research, analyst interactions, telebriefings, andconferences. Visit www.idc.com to learn more about IDC subscription and consultingservices. To view a list of IDC offices worldwide, visit www.idc.com/offices. Pleasecontact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) orsales@idc.com for information on applying the price of this document toward thepurchase of an IDC service or for information on additional copies or Web rights.Copyright 2011 IDC. Reproduction is forbidden unless authorized. All rights reserved.©2011 IDC #230624 13