Six Things Google Drive Must Do To Compete With Dropbox, Apple's iCloud, Microsoft Cloud, and Box

With the imminent release of Google Drive next week, I’ve been thinking about what I’d like to see in this offering, for which I have high hopes but equally realistic expectations. In order for Google Drive to compete with key competitors—Dropbox, Apple’s iCloud, Microsoft’s Cloud, and Box—it will have to meet six important criteria.

1. It must understand workflow – the way we work. Part of robust workflow is the ability of parties to collaborate. Another critical element is ease of use.
2. It must be integrated with Google’s current work offerings, namely Google Docs.
3. The amount of free memory that it offers must far exceed its announced five gigabytes (5 GB) of storage. I doubt that this will be the case in the short term. However, I strongly believe that consumers’ willingness to pay for value far exceeds their willingness to pay for memory. Value depends on every other factor listed here.
4. It must be a platform integrated with third-party applications.
5. It must be available via specific apps on mobile devices. This is how many of us work and play outside the office, and thus how we must be able to access our files, photos, videos, etc.
6. It must be cloud-based, hardly a hurdle at this point.

Let’s look at these criteria in turn.

Workflow and Collaboration. This is the most important of the criteria set forth above. I need my vendor of choice to be integrated as seamlessly as possible with the programs I’ve used for years and continue to use. Microsoft Word is a perfect example. Both when I used IBM-compatible PCs and then when I switched to Macintosh, this flow has always been based on a simple folder structure that resides either on my desktop, a third-party application server, or in the cloud. The genius of Dropbox, for example, is that you don’t see or feel that it’s there. Your Finder folder (on a Mac) has essentially and seamlessly moved to the cloud. This led the late-Steve Jobs to offer Dropbox’s founder $800 million because Dropbox had solved a critical need that Apple’s own engineers had not. Jobs saw the future and pounced. Dropbox demurred.

Google Drive’s workflow must be tightly integrated with Google Docs, a free cloud-based option for word processing, spreadsheets, surveys, and Powerpoint-like presentations. I’ve always liked Docs, which has great strengths and also distinct weaknesses. For example, I can share a cloud-based document with a co-worker in Madrid, who can edit the document in such a way that I can see what he is doing in real time. When he types or make comments, I can see precisely what he is typing at that moment. This is not only cool, but it allows me to work with my colleague in such a way that we can pose questions to one another on the fly. Docs also has version control that allows users to turn back the clock to specific dates and times to see precisely what the document looked like then and who made which edits. This is a great feature.  Docs also has its weaknesses when it comes to workflow, most notably that documents realistically need to be exported to, say, Microsoft Word when I want to submit them formally to a third party for consideration and review. This can require considerable time to format documents. In all fairness, I can also share the documents through the Docs sharing function, which works wonderfully on teams where everyone is on Docs. But the reality remains that Docs is not sufficiently ubiquitous so as to allow me to present documents in Docs’ final form in a manner as professional as Microsoft Word, which third party business associates still expect.

Two other notes with respect to workflow. Google Docs allows users to upload files in their native formats (.doc, .pdf, .xls) into storage. However, if you wish to work with those files, you have to download them either to your desktop or to your chosen third-party vendor – ironically, in my case, to Dropbox. Upon completion of your work, you must then upload the document again into Docs. This is cumbersome.  By contrast, for example, if you choose a Word document in Dropbox, one click opens the document in its native application (e.g., Word). One you’ve edited the document, you can simply save it and it returns to Dropbox within your Finder window. Again, this was the future that Steve Jobs saw, only it exists in the present. It’s the easiest way to work.

Second, version control is essential and I’m always surprised that some vendors haven’t built this out when pure document management solutions such as iManage and Documentum provided robust solutions for this in the late 1990s. No one today can work effectively without version control.  I edit pieces numerous times, each marked appropriately (e.g., v.8 Google Drive article draft 2012.04.18). Others control versions in whatever way suits them best.

One last thought about Google Drive’s workflow. It will be interesting to see how (if at all) Google integrates with Google+, its self-professed backbone. Google soars when it thinks big – for example, Search or revolutionizing targeted advertisement models. Some of its products are top-notch (e.g., GMail, Google Reader, Docs, Google Apps). Others like Wave have flopped miserably and adoption numbers for Google+ are a perfect example of how to lie with statistics. No matter how many users have adopted the service, the fact of the matter is that the amount of time they spend using it is de minimus. Many have called it a ghost town, and I couldn’t agree more. It’s not sticky, so to speak. Larry Page has in large part staked the company’s future on social media. It has a long way to go. It thus remains to be seen which category—success or flop—will characterize Google Drive. I sincerely hope that it succeeds for at least three reasons: (i) it might change the way I work; (ii) I want to see how innovative Google can be; and (iii) it’s good for the market.

Free Memory. Considerable fanfare surrounded the discovery of a web page two weeks ago that showed that Google Drive increased its offering of free memory from 2 GB to 5 GB, presumably to match Dropbox. Microsoft Cloud offers 25 GB. My response: Who cares? The amount of free memory that a vendor provides has almost nothing to do with the value that users derive from its product. The value stems from other factors. Does the offering understand workflow? – my top criterion. Does the vendor have partnerships that allow for integration with third-party applications, as discussed below? That’s value.

The reality is that the marginal cost of memory is so minimal that it does not warrant any commensurate—and usually disproportionate—increase in price for consumers. All vendors know this, but they don’t have a proper methodology to determine and charge for value, so they don’t. Moreover, without market forces to drive down the cost of memory, it doesn’t behoove them to do so. I’m more than willing to pay for software development and innovation (value), but not for more memory. The current market dynamic will change sooner rather than later as memory becomes perceived as the commodity it is. As a result, vendors use an archaic per-GB pricing model. For example, Dropbox charges $795 for one terabyte (1,000 GB) and the ability for five users to use the service. I’m faithful to Dropbox, but at that level, no thanks – the cost of its storage at that price point is far overpriced, as demonstrated below.

I need enough storage for my documents, music, photos, and videos, the last three of which are storage-eating unstructured data. A jump from 2 GB to 5 GB or even 100 GB is effectively meaningless to me and I’m not willing to pay any premium on top of the negligible marginal cost to the vendor. To quote Cuba Gooding Jr. in Jerry Maguire: “Show me the money.”  The money is in value, not storage. If I want a mere storage locker, I’ll look elsewhere. One might argue that a company in fact needs 1,000 GB (in relative terms, an extremely small amount of memory), but the principle by which to judge the offering is the same: value.

Integration with Third Party Applications. This is a no-brainer. Any vendor that is not forward-looking enough to build a platform offering will quickly fall behind in this competitive market. Box (not to be confused with Dropbox) does a very nice job of this with a platform that provides three key elements: (i) open APIs to provide programmatic access to many of Box’s technology and capabilities; (ii) developers can build applications that run from within Box’s web application; and (iii) developers can embed a window into Box and the content stored there from other software applications. This has resulted in integration with Google Docs (a wise move), Netsuite, Microsoft Office (and Outlook in particular), and Salesforce. This is an impressive strategy that creates value.

The three integration benchmarks that Box has met are essential to any application’s stickiness. Will users come back or abandon the offering quickly? Does it satisfy individual and company workflow needs? Will those parties use it to collaborate with their clients and parties, among others? Will third-party developers create innovative apps based on their comparative advantage as focused startups with respect to specific tools that vendors would have to lose focus to develop?

Google Drive has an opportunity to do this well, especially with the legion of offerings available in its Chrome Web Store.  We’ll see.

Mobile. Any offering today must allow users to access their data on mobile devices, and specifically via custom apps, as opposed to through a browser. DropBox and Box already offer such apps. Google Drive will have to follow quickly.

Cloud Offerings. I don’t think this merits too much attention simply because any non-cloud based offering is dead in the water. If the cloud isn’t important to a user in this day and age, he can purchase an external hard drive and be done with it. You can get a perfectly nice Seagate hard drive from Amazon. Cost? $109 for one terabyte of storage. That certainly puts the cost of memory into perspective.

Conclusion

To bring us full circle, there are six criteria that define the success of workflow / collaboration / storage options.

1. An understanding of workflow. One could add ease of use here.
2. The ability to collaborate.
3. Free Memory. Market forces will usher in the demise of per-GB pricing sooner rather than later.
4. The ability to access data on mobile devices.
5. Integration with third-party applications.
6. A cloud-based offering.

Conclusion

This is a crowded space with market leaders that have solved critical problems and have venture capital funding behind them to continue innovating. Google obviously doesn’t need financing – it has the luxury of throwing money at software applications such as Google Drive. As for solving critical problems, it remains to be seen whether Google will master at the outset something as ‘simple’ as integrating with its own Google Docs in a manner that addresses workflow—not just storage—and solves some of Docs’ weaknesses, which I address above. If it doesn’t, users will lose interest quickly.  If it does, this market could be even more fun to watch, with vendors forced to compete by offering increased non-storage value to users.

As a Google fan, my fingers are crossed.