Bits Blog: Box and Dropbox Come of Age in Cloud Computing

Two of the buzziest competitors in cloud computing are settling into coexistence — and maybe figuring out ways to take on the giant in the market, Amazon.com.

David Paul Morris/Bloomberg NewsAaron Levie, the chief executive of Box.

The online data storage company Box announced on Tuesday that it was getting $125 million in new financing, which the company’s chief executive, Aaron Levie, says will be used to expand internationally and invest in consultants for big corporate clients. General Atlantic, a large private equity firm, is contributing $100 million of the investment. Gary Reiner, the former chief information officer of General Electric and now an operating partner with General Atlantic, will join Box’s board. Mr. Reiner is also on the board of Hewlett-Packard.

Box now has more than 500 employees, said Mr. Levie, which is more than double the number it had at the beginning of 2012. Box also has more than 100 outside software developers building mostly corporate applications for Box’s storage. The company is increasingly selling the ease of data file sharing as a collaborative tool, reflecting the trend of pushing social media in enterprise technology.

“We’ve added about 150 engineers so far this year,” said Mr. Levie. Most of the rest of the growth is in sales and marketing and client services, he said. The urgency was forced, he said, by a rapid shift by corporations away from storing their own data. “It’s amazing how quickly businesses are getting behind the idea of not managing their own equipment,” he said.

Like its competitor Dropbox, Box offers a little bit of data storage free, then charges for additional amounts. Both companies make money from a relatively small number of paying customers who need large amounts of storage. Mr. Levie said Box has about 125,000 businesses using its service, but only “tens of thousands” of paying customers.

Despite being in the same business, the two companies seem to be finding entirely different customer bases. While Dropbox has a corporate service, it recently announced capacity and pricing changes in its much larger consumer business, aimed at encouraging people to store things like photos taken with cell phones.

Box is aiming for the corporate customer. It has for several years sought to make its storage compliant with various industry regulations around things like security, and last year announced its business for customers using the service for corporate applications.

Both companies are finding ways to put into their online storage more features and user-friendly services than are found in Amazon’s Simple Storage Service, or S3, one of the first big public cloud computing initiatives.

S3 came out in 2006, and is much larger than either Box or Dropbox (Dropbox runs on S3, while Box uses its own servers). In June of this year Amazon announced that it was storing more than one trillion objects, or data items of varying size, a tenfold increase in about 14 months.

Some customers still find that service highly technical to use, and complain about a lack of customer service.

By marshaling business consultants and putting easy-to-use apps on smartphones, Box and Dropbox appear to be exploiting the dissatisfaction.

Cloud storage was the first item offered by Amazon, in what became the storage, computing and applications framework that is Amazon Web Services. It is fitting, then, that the other online storage startups appear to be the earliest to have firmed up their businesses.