How Dropbox’s partnerships with Microsoft, and now Google, have shaped its SaaS approach
Dropbox’s decision to partner with Microsoft five years ago has paid off handsomely for the company. Tuesday it plans to unveil an important step in its evolving partnership with Google, a trend that Wall Street is noticing.
During the opening day of Google Cloud Next 2019 in San Francisco, Google and Dropbox plan to show off new capabilities built across their respective products that will allow G Suite users to create and edit Google documents in their Dropbox accounts. If you’re signed into both accounts in the same browser, you’ll be able to search for your Google documents inside your Dropbox folder or create new ones without toggling back and forth between two tabs.
It sounds like a simple idea — and worked relatively well during a demonstration of the beta version — but it took a lot of joint design and engineering work on both Google and Dropbox’s part, said Josh Kaplan, product manager at Dropbox, in an interview ahead of the announcement. Given that more than 50 percent of Dropbox’s customers also use G Suite, it’s yet another sign that software-as-a-service companies are quite eager to partner with each other, unlike enterprise tech vendors of the past who wanted an enterprise’s undivided attention.
That’s because mutual customers demand it: “the more their content gets siloed, the harder their project gets,” Kaplan said. Companies might standardize on either Google or Microsoft’s tools for internal use, but teams that face customers or work with vendors often find themselves having to deal with both types of systems, and find it easier to manage that process from inside their Dropbox folders, he said.
Nomura Instinet published a research note last week outlining how Dropbox has used those partnerships to diminish investor fears that Microsoft and Google, given their existing products resources and deep relationships with enterprise customers, could limit Dropbox’s potential.
“(Dropbox) continues to believe it will be the point of connection amongst users of Microsoft documents and Google documents, as once the user tries to share content outside his/her organization, things become difficult and make for an unpleasant user experience,” wrote Nomura analyst Christopher Eberle in the report.
Of course, rival document-sharing company Box also has similar partnerships in place with Google and Microsoft, so in some ways this model is table stakes for companies like Dropbox. And as big SaaS cloud companies also willing to partner with perceived enemies, Microsoft and Google could turn this market on its head if they developed file-sharing systems that supported multiple document software providers.
But Dropbox is in an interesting place one year after its IPO, profitable and growing. It’s following a well-worn path in SaaS: make something people can’t live without, and then make it work with the six or eight other tech tools that modern office workers rely on every day.
“While a significant number of investors still view (Dropbox) as just one of the many competitors in the document storage space, we see the company’s efforts to continually expand its partnership ecosystem as having positioned it as the third-party collaboration dashboard to bring multiple outside users into a seamless work environment,” Eberle said.
[Editor’s note: This post was updated to correct the spelling of Arash Ferdowsi’s name and the percent of Dropbox users who also use G Suite.]