There is no doubt that Google (GOOG) is one of the tech world’s 800-pound gorillas, and when it gets you in its sights, you better be careful or you will get crushed. Standing in its cross-hairs now are two cloud-storage companies, Dropbox and Box, which are anticipated to have a two of the hottest IPOs of 2014.
Last week Google announced that it was slashing data storage prices on its own cloud product, Google Drive, in a move that should send shivers through Dropbox and Box boardrooms and is sure to have repercussion for the sector. Of course Google has plenty of experience in dominating its smaller (and sometimes larger) competitors.
Even with a four-year head start, Alta Vista, a once-dominant search engine, and Yahoo (YHOO) could not keep pace with Google. Once its search page went live in 2004, it was only a matter of time before Google put the former out of business and relegated the latter to a second-tier search engine.
But Google’s ability to crush companies hasn’t just been limited to search. Google Maps effectively did away with MapQuest. Microsoft’s (MSFT) Hotmail has been largely supplanted by Gmail. And even the BlackBerry (BBRY) smartphone operating system has largely been replaced by Android OS devices.
Much More Space for Free
Google’s advantage is its ability to scale products quickly and efficiently, making it hard for smaller or less-well-run companies to compete. This is especially true in areas like cloud storage, where products are commoditized and difficult for the consumer to differentiate.
Google Drive now offers up to 15GB of cloud storage for free, compared to 2GB for Dropbox and 10GB for Box respectively. But Google really turns up the heat with paid storage, offering 100GB for only $1.99 per month. That same amount with Box will cost you 2.5 times as much and almost 5 times as much with Dropbox. And for those in need of mega-space, Google offers 10TB+ for $99 per month.
Of course, Google has been unable to crush a few competitors — at least not yet. Just over a year ago, it launched Google Keep, a product designed to save, organize and sync notes and content, which was squarely aimed at the leader in that market, Evernote. Yet, Keep has faded into semi-obscurity, while Evernote has reached a $10 billion private valuation and is regularly rumored to be planning an IPO of its own.
Part of the reluctance of consumers to switch from Evernote to Keep has to do with Google’s annoying habit of abandoning much-loved products with seemingly no rhyme or reason. Only time will tell if Keep is playing possum, waiting for Google to allocate intellectual and financial capital towards its success or if it will be the next Google Reader (2005-13, RIP).
However, nobody is counting Dropbox or Box out quite yet. They both have loyal user bases and can operate better in niches that Google is too big to care about. But this latest move should be a wakeup call for both companies, one they best be ready to answer.
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