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Essay: Box’s Four Pillars of Growth: A Critical Analysis (Cloud computing)

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  • Published: 1 February 2018*
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  • Words: 837 (approx)
  • Number of pages: 4 (approx)
  • Tags: Cloud Computing essays

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After having reviewed literature and given a brief introduction into the segment of Cloud computing, the following elaboration intend to critically outline Box’s strategy. In brief, its immense growth it continues to experience is based on four main pillars, which go as follows :

1. High willingness to spend on marketing to acquire new and retain existing customers

2. Good ergonomics and user-friendliness

3. Business & IT focus from the start

4. Collaboration and partnerships with industry Goliaths, e.g. Microsoft, Google, IBM, and others

1. High willingness to spend on marketing and sales to acquire new and retain existing customers: Until yet, Box has been willing to heavily fund sales & marketing operations, with costs to account for USD 171 million, USD 208 million, and USD 242 million in 2014, 2015, and 2016, respectively. As the previous graph illustrated, these figures on operating expenses of sales & marketing represent 134%, 91%, and 74% of the revenue, respectively. The Box’s management claims, however, that profitability will come with renewals from its existing customers over time and that it needs to contin-ue expanding its customer base, i.e. reasons which justify the high expenditures on marketing and sales.

However, at the same time management claims that it does not expect Box to be profitable in “the foreseeable future”, albeit it has been able to efficiently improve its operations and lower its cost over the past. As long as the shareholders support this deep-pocket-funding strategy, Box is on an ex-ceptional track to become the cloud-based ECM vendor of choice in the enterprise world.

2. Good ergonomics and user-friendliness: In contrast to traditional ECM software offerings that al-low comparable sharing features, Box is very intuitive and easy to use without any previous training. It is compatible with the most common operation systems and fits with the usual browser and mobile user habits. These characteristics yield a great customer experience and high customer satisfaction rates. This is based on evidence from Gartner research, which outlines that Box, with over 70 cus-tomer reviews and thereby the most of any other peer – scores 4.4 out of 5 on overall experience, i.e. results that speak for high customer satisfaction across functional roles and for that it performs better than comparable competitors.

3. Business & IT focus: As previously outlined, there are numerous provider of Cloud, and therefore also for file storage and sharing solutions on the market. However, what most of them have in com-mon is that they are centered on the consumer, with Dropbox, Microsoft OneDrive, or Google Drive being the best examples. These services allow the user to store his data in the cloud and decide af-terwards which file or folder she will share and who should get access to the data. This, however, can prove very laborious for the user who wants to share files for a personal use as well as for sharing with ad hoc teams. Since data is the resource of the 21st century and the need to share documents with internal and external collaborators has surged, pure-players such as Dropbox enhanced their services with professional features such as the provision of a collaboration platform, trying to pre-vent the shadow IT phenomenon. In this respect, Box has a competitive advantage since it was born as an enterprise-orientated file sharing and collaboration platform from the beginning. It addressed corporate IT departments’ concerns directly from the beginning on by providing the necessary con-tent security, administration and sharing mechanisms under one roof. From this perspective, Box is more an ECM company than a mere file storage service provider.

4. Collaboration and partnerships with industry Goliaths, e.g. Microsoft, Google, IBM, and others: Thanks to its early successes with big companies, Box managed to ink partnerships with competi-tors, resulting in coopetition with many of these tech gorillas. One particular example of great strate-gic importance is its collaboration with Google, in which Google provides a direct access to Box from its Chromebook laptops. Another example constitutes Box’s partnership with IBM that allows Box to massively expand its offering as IBM now resells and hosts Box’s solutions around the globe as its preferred file sync & share platform, while all IBM information management tools are integrated with Box, including IBM’s most prominent artificial intelligence application Watson.

Another great announcement is Box’s enhanced support for its developer ecosystem, including new and improved developer tools and a new incubator program in joint effort with Amazon Web Ser-vices (AWS). And next to these major industry players of Amazon, Google and IBM, there is a num-ber of other partners that provide compatible apps for Box. Examples for such applications are en-tire CRM systems, project management tools, and e-signature solutions.

Having briefly introduced the industry and Box’s performance and its pillars for its success, the following pages shall introduce a competitor analysis of the most significant peers of Box, Inc. It aims at elaborat-ing insights on future competitor strategies and, coupled with the internal perspective based upon a SWOT-analysis, to address the question which potentially upcoming threats and opportunities arising from the unique selling propositions of Box’s competitors need to be handled by Box’s management.

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