News

Dropbox Rides BYOD Wave into the Channel

• By Jeffrey Schwartz
• March 30, 2016

Since arriving at Dropbox from Microsoft just eight months ago, Thomas Hansen has put in motion a channel program that's on pace to bring on thousands of new resellers and solution integration partners.

The new channel play is a major shift for a company that until recently had relied primarily on direct sales to expand its small but growing base of commercial, public sector and enterprise customers. The move comes as Dropbox looks to monetize its huge base of consumers using the free version of its service by shifting its focus to growing into paid commercial and enterprise services.

Hansen's efforts have paid off. Eight months after bringing him over as global vice president of sales and channel, Dropbox has named Hansen global vice president of revenue, apparently a reward for fast-tracking the company's aggressive move into the channel.

In an interview, Hansen said his 15 years at Microsoft, most recently as vice president of its worldwide SMB business, gave him the understanding and worldview necessary to establish a channel program that would help distinguish Dropbox and put his new company on a growth trajectory. That was an unenviable challenge considering Dropbox is up against a number of large, well-funded competitors, including Google, Mozy, Citrix (ShareFile) and numerous others. The largest challengers Dropbox faces are Box, which is growing rapidly, having posted a 36 percent year-over-year jump in revenues last quarter; and his old employer, Microsoft, whose OneDrive for Business is the cornerstone of Office 365 and SharePoint.

Perhaps Hansen's largest move was to implement a traditional two-tier channel distribution channel, which he argues isn't so traditional among some of the other players, aside from Microsoft. Hansen signed a global distribution deal with Ingram Micro and also brought on Synnex to provide additional coverage in North America. The system to automate the supply chain went live three weeks ago, Hansen said.

As of last week, Dropbox had 2,200 channel partners, ranging from resellers, systems integrators (SIs) and managed service providers (MSPs). With enthusiasm, Hansen said that's only the beginning.

"Our automation is now completed and fully launched with Ingram and Synnex and we are starting to see that scale grow fast and we are very pleased with that," Hansen said. "My aspiration is to have, over time, tens and tens of thousands of resellers of Dropbox. I can't share a timeframe for that with you but we certainly are investing in a significant way into the channel."

Channel partners and SIs focused on supplying Office 365 and SharePoint may ask why customers would want to pay more to add Dropbox to their implementation. After all, those Microsoft subscriptions already include 1TB-per-user of OneDrive for Business with the monthly service fee.

One key reason is that Dropbox has 500,000 consumers and 8 million businesses that use the service already, though many are unsupported. In other words, since many customer files are already in personal Dropbox stores, partners can ride the "bring your own device" (BYOD) wave and provide what Hansen says is a more reliable, more performant multiplatform service.

Meanwhile, because of that brand strength and massive user base, don't look for Dropbox to bother with white-label options for the channel.

"That's not something we will do, and I say that quite categorically," Hansen said. "We are a broad horizontal opportunity for every single reseller to go and sell the product that has been used already that has been used by millions and millions of businesses out there."

Since launching a business offering in late 2013, Dropbox has signed up 150,000 paying customers. Though that accounts for a minuscule percentage of its 500 million consumers (most with free entry-level accounts), Hansen said the channel program is starting to show results. In the last quarter, the company added 25,000 new business customers, Hansen said.

"The whole notion of consumerization of IT that we've had as our foundation literally gives us the opportunity to meet with every single business that already has Dropbox heavily in use to have a discussion," he said, adding there couldn't be a simpler product for a partner to pitch. "It's not like you have to go out and convince someone to try something they've never seen before," he said. "When we arrive at potential customers, they already understand what Dropbox is. It's a great opportunity for resellers to have a good discussion with current customers, as well as to gain net-new customers."

Hansen doesn't believe that Microsoft's bundling and integration of OneDrive for Business with Office 365 and SharePoint will be a major inhibitor. "What IT is telling me is even after Office 365 and OneDrive for Business gets implanted in those companies, they see rapidly increasing use of Dropbox," he said. "They are finding that actual use and adoption of OneDrive for business is very low and that the users have voted with their fingers and are bringing Dropbox to work. That leads to a really good discussion around how Dropbox can help all users in those companies to get the right type of manageability, security and support from the IT department by getting a Dropbox for Business or Enterprise solution in place. We at Dropbox can unleash tremendous additional value for both Google Apps and Office 365 due to our deep native integration."

That native integration, which Hansen described as the technology in the background, includes 300,000 apps that support custom workflows that integrate with other pieces of software, including Office, Google Apps for Work and Adobe. "We have more than a billion API calls every day," he said. "And we now integrate with almost any piece of software or cloud vendor."

Dropbox built its infrastructure largely on Amazon Web Services (AWS). Dropbox is, in fact, one of the early adopters of AWS' flagship S3 storage service. However, in its bid to target enterprise users, Dropbox anticipates it will host exabytes of data. To reach that scale, Dropbox earlier this month said it is making a huge shift in its infrastructure with a plan to move away from AWS and run its own datacenters.

"As the needs of our users and customers kept growing, we decided to invest seriously in building our own in-house storage system," said Akhil Gupta, Dropbox's vice president of infrastructure, in a March 14 blog post. Doing so will allow Dropbox to customize its entire stack to improve performance and provide better scaling though its own approach to customizing hardware and software, which Gupta said will result in better economics.