Box Expands Its Customer Base by Using Collaboration as a Key Market Differentiator

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1 VENDOR PROFILE Box Expands Its Customer Base by Using Collaboration as a Key Market Differentiator Paul Hughes IDC OPINION Global Headquarters: 5 Speen Street Framingham, MA USA P F Box is an enterprise content collaboration service provider that enables businesses to securely store, access, share, manage, and collaborate on content online anytime, anywhere, from any device. The company, headquartered in Los Altos, California, currently has over 15 million users and over 150,000 businesses and continues to grow its presence in the cloud storage, file synchronization and sharing, content management, and collaboration markets by making cloud-based content easily accessible and available across diverse mobile devices for secure sharing and team collaboration. A recent round of $125 million in funding on top of over $155 million already raised has given the organization the ability to invest in technical innovations and expand its geographic operations. Box set out initially to provide a simple, easyto-use interface to manage content online, focusing on common business needs such as file storage, secure file sharing, and content-centric collaboration. Given its business focus, Box provides a full set of features to administrators for managing users, permissions, security, and content, as well as detailed reporting for full audit trails. While Box does not consider cloud storage to be one of its primary markets, IDC increasingly sees buyers consider or purchase Box as the corporately sanctioned file storage and sharing service to replace consumer file sharing tools like Dropbox. We believe Box will continue to gain market share in the cloud storage and adjacent markets in enterprise content and collaboration markets because of the company's: Ability to attract consumer, SMB, and Fortune 500 customers, with dedicated support services for each customer type, and the ability to provide easy-to-use, "no training required" user experience while meeting the scale and security requirements demanded by IT across this spectrum of buyers Attractive pricing models that allow customers to sign up quickly, store and share files quickly, and enable team and mobile collaboration easily Focus on differentiation strategy that goes beyond storing content in the cloud to creating value by providing easy access and collaboration that appeal to users while providing a full set of enterprise integrations and admin tools to manage users, devices, and the content that IT requires Filing Information: March 2013, IDC #240186, Volume: 1 Storage and Data Management Services: Vendor Profile

2 IN THIS VENDOR PROFILE This IDC Vendor Profile provides an overview of Box, a Silicon Valley enterprise content collaboration service provider. Leveraging IDC's expert understanding of the competitive landscape and future outlook, this document highlights company and market information tailored to the investment professional's needs. SITUATION OVERVIEW Company Overview Box, based in Los Altos, California, was founded in 2005 on a simple principle of providing users the ability to securely access, share, manage, and collaborate on content anytime, anywhere, across any device. The company has now reached over 15 million registered users serving consumers, SMBs, and enterprise companies. A recent infusion of $125 million in venture capital funding has provided the company with the ability to build out its EMEA presence, grow its employee base, and invest in research and development around its solutions set. Box is backed by venture capital firms Andreessen Horowitz, Bessemer Venture Partners, Draper Fisher Jurvetson, Emergence Capital Partners, General Atlantic, Meritech Capital Partners, Social+Capital Partnership, NEA, Scale Venture Partners, and U.S. Venture Partners and strategic investors Salesforce and SAP. As of February 2013, Box had over 150,000 businesses and over 15 million total users, with revenue more than doubling year over year. Box has grown to become one of the most popular cloud storage and content management solution providers for enterprises looking for low-risk and lighter-weight options than traditional file shares or Microsoft SharePoint for external and mobile collaboration. The company competes in the public cloud advanced storage services market as well as the content and collaborative applications market. Company Strategy Box provides online storage, secure collaboration and sharing, mobile content management, and a popular platform for ISVs and mobile developers to develop content-centric mobile applications. Box's cloud content sharing services eliminate the need to use different file sharing solutions that a company typically employs, such as FTP, NFS, or MFT. To enable users that prefer to work on the files directly on the desktop, Box provides desktop clients that automatically synchronize a user's content in the cloud. Content stored in Box is encrypted and indexed for full-text search. Other important features surrounding content management include full document library services, including unlimited version control, the ability to lock files while working, and rolebased access to content and granular security controls over users and content. Within Box, it's very easy to share files with anyone, anywhere; these files are then accessible from any device. Box provides a content platform that is rich in collaborative features. Its robust content preview technology allows users to preview directly in the browser over 100 file formats including rich media files. Users can like, 2 # IDC

3 discuss, comment, assign tasks and due dates, tag, search, and see updates from their own activity stream, creating a social experience. For more secure and confidential content collaboration, Box provides robust security controls, configuration options, and a list of certifications such as SSAE 16 Type II SOC 1 and SOC 2, Safe Harbor for the United States and the European Union, HIPAA, and HITECH to address these specific compliance requirements. Three service offerings are available: The Personal edition is targeted at prosumers, with no account setup fees, 5GB of storage, the ability to edit documents in the cloud, desktop synchronization and file sharing and collaboration features, full encryption, and two-factor authentication. The Business edition is targeted at SMBs, with 1TB of pooled storage across multiple users, advanced search and file sharing, and team collaboration functions. Box provides an administration console to manage users, permissions, and reporting. The Enterprise edition is targeted at enterprises, with unlimited storage, custom branding, enterprise-grade security integrations (such as Active Directory/LDAP), single sign-on service (such as Ping, Okta, or OneLogic), and mobile device management solutions (such as Good Technology, MobileIron, AirWatch, and SAP Afaria). The Enterprise edition also provides integrations with core business systems such as Salesforce, NetSuite, Jive, Chatter, Zendesk, Concur, and SugarCRM and the ability to work with on-premise content in SharePoint, Documentum, and other ECM systems. Box also provides a comprehensive administration console to manage users, groups, devices, content, role-based permissions, the ability to archive for ediscovery, retention and disposition of content, admin search for ediscovery, and legal hold in quickly locating content. Access to stored information is made ubiquitous by Box's solution, supporting access via Apple's ios, Google Android, Windows 7 and 8, and BlackBerry devices. Box has one of the most extensive partner ecosystems, with over 200 third-party applications that extend the Box functionality on Box.com and over 500 mobile productivity partners on its Box OneCloud initiative. Some of the prominent enterprise applications that Box has partnered with are Salesforce, NetSuite, Jive, Yammer, VMware, Ping, Okta, MS Office, Google Apps, EMC Documentum, IBM FileNet, and MS SharePoint. All content stored in a Box account is managed through using robust administrative capabilities and strong security features to securely manage activities. Advanced users have access to a broader range of search functions, including search by user, content type, date, size, and context, and a full audit trail of activities can be accessed for business intelligence and reporting functions. Box recently expanded its datacenter reach to support the increased demand for storage and content collaboration and is furthering its expansion internationally. Box has three primary datacenters in the United States: two mirrored datacenters located in California and one in a separate geographically dispersed location. As a part of its international expansion strategy, Box has developed patent-pending Box Accelerators, which are edge networks with their own algorithm that analyze user 2013 IDC #

4 traffic (based on location, operating system, and browser preferences) to optimize the fastest path for content into the Box cloud. Box currently has Accelerators in place in nine locations: New York, Chicago, Portland (Oregon), São Paulo (Brazil), Amsterdam (Netherlands), Hong Kong, Tokyo, Singapore, and Sydney (Australia). This gives Box users in those regions significantly faster and improved performance when uploading very large files from New York to Tokyo, for example. Another innovation that Box introduced recently is Box Embed, an HTML5 framework that makes it simple (no coding required) to embed the storage, secure sharing, and content collaboration functionality in any applications or Web sites. A leading cosmetics company is using Box Embed to share videos about its mission, vision, and core values to its geographically dispersed workforce, both its own employees and affiliate professionals working with its products. Box's cloud storage services are charged based upon the subscription plan chosen by the customer. A free subscription is available for anyone with 5GB of storage and basic file sharing capabilities and is typically positioned at "prosumers." Business and enterprise subscription plans leverage more of Box's analytics and collaboration features and typically cost between $15 and $35 per month based on the customer's storage and enterprise integration requirements. Box customers include Avaya, Electronic Arts, Gap, McAfee, Nationwide, NBC Sports, Netflix, McCann Worldgroup, MGM Resorts International, Procter & Gamble, Random House, Sony Music, and Sunbelt Rentals. FUTURE OUTLOOK The recent influx of cash, ongoing development of the Box platform, and expansion to provide a more global offering put Box in a healthy position for growth in the coming years. Box now supports multiple currencies, and the company recently opened an office in London to serve as a command center for growth across EMEA and signed reseller agreements with HP EMEA and Deutsche Telekom to more effectively expand business in the region. As cloud storage becomes increasingly commoditized, Box's focus on content and enterprise collaboration, its investment in the platform to make content truly ubiquitous across devices and across key enterprise systems, and its extensive partner ecosystem will be where it will continue to differentiate. Box sees an opportunity to continue to play into the wave of infrastructure consolidation strategies that many of its enterprise customers are undergoing as well as secure its leading position in mobile collaboration, providing greater workforce efficiencies by allowing users from different locations to gain easy and secure access to collaborate on shared content. Continued focus on building out the mobile productivity capabilities with its over 500 mobile partners in the OneCloud initiative also positions Box ahead of other players in what has become a completely mobilized European marketplace. 4 # IDC

5 ESSENTIAL GUIDANCE Advice for Box Box needs to stay differentiated in an increasingly commoditized market, especially against cash-rich organizations like Google and Microsoft. Box has locked in its customer base with its core value proposition of managing and syncing content in the cloud via any device. Box has also demonstrated how its cloud services can be leveraged as a productivity engine for the end user. Taking this value proposition global should be the first big step, and Box should avoid jumping into the archiving, disaster recovery, and online storage services currently owned by large infrastructure providers like IBM, HP, Rackspace, and Savvis. Recent partnership agreements with HP and Deutsche Telekom have helped expand Box's reach, and we believe that the reseller partner strategy needs to be expanded further to include other regional players. With Box Accelerators in place in South America, Asia, and Australia, finding similar reseller partners in those regions should be a top priority for Box to expand its user base in those regions. LEARN MORE Related Research IBM Expands Its SmartCloud Offering with Storage Cloud Access (IDC #lcus , February 2013) Worldwide Storage Services Opportunity for Big Data Forecast (IDC #234602, May 2012) Cloud File Services: The Ecosystem of Opportunities for Personal and Business Use (IDC #234023, March 2012) Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2013 IDC. Reproduction is forbidden unless authorized. All rights reserved IDC #