OneDrive is Coming For You

Every so often, an up and coming software company will announce a new partnership with Microsoft adorned with a great deal of optimism. I cringe every time.

These are not agreements made with the best interests of everyone in mind. Someone is eventually going to lose, and it will not be Microsoft. To be fair many of these sorts of deals fall into the “necessary evil” category but at the end of the day it is important to remember prostitution is not a partnership.

Dropbox first announced their Microsoft partnership in 2014 and continued to evolve it with new developments as recently as last June.  At the time I warned that this would not end well for dropbox as I believed that eventually Microsoft would leverage their position to flip users to OneDrive when they felt like it. Word of Pie said I was wrong but this week we have a new offer from Redmond to buy out the customer contracts of OneDrive for Business competitors Dropbox, Box and Google Drive. Perhaps there was something to be concerned about after all.

With the migration of the planet to O365 and the addition of key OneDrive features like external file sharing, the hassle of having two vendors managing the same content in the cloud starts to make the integration feel unnecessary. In some ways the EFSS sales teams even preemptively solved an adoption problem for O365. MSFT let the cloud content vendors (their users really) fight the off premise file share battle with the internal IT organizations. Now that businesses are emotionally ready for their files to be solely managed (edited and stored) by a third party in the cloud they are more than happy to oblige. The front end will always win – eventually.

Since Dropbox has quietly filed for an IPO it is clear that they see the landscape changing. I am always skeptical at how effective these sorts of swap out programs are in the long run though. Content is historically much harder to move once it is in a particular cloud. Nevertheless the threat of losing customers to the bigger partner changes the dynamics. Integrations can start to work against you now.

How does this impact Box? This is a company that famously bought snarky billboards to irritate Microsoft (which I admire) but then it accepted the necessity to partner with editor integrations. They now face the same risks as Dropbox but with one key advantage. Last year Box pivoted the core of the relationship toward Azure and AI rather O365.

This not only helps address longstanding data residency and ownership issues for Box but puts them in a place that where Microsoft cares if they are successful. I’ve long believed product infighting at MSFT is only slightly less bloody than a Game of Thrones episode and when it comes to prioritization, Azure clearly wins over OneDrive. Driving Azure and competing with Amazon on the PaaS front is exponentially more important than incrementally expanding OneDrive’s footprint. Not to suggest that they won’t happily flip a Box contract, but Box is clearly a secondary target because it can support a different objective. Azure growth.

This is not a passive announcement. You should anticipate a push by Microsoft sales during O365 migrations to take the next step and consolidate cloud document stores as well. I do not think this will be an easy sale. As I mentioned the inertia of content will make it difficult to dislodge from existing providers for a number of reasons. The promise of “seamless” integration of OneDrive will be a compelling argument though to contract holders so make sure that the user’s experience across your business device landscape is carefully evaluated and protected in the transition.

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