Four Questions (Answered!) About the Yahoo and Dropbox Partnership

Four Questions (Answered!) About the Yahoo and Dropbox Partnership

Will cloud storage be tech’s next bubble? Dropbox, a cloud storage company, is seeking to raise $250 million in new funding, which would value the company at more than $8 billion, twice the valuation from its last round in 2011.

 

What has Dropbox done since 2011? One of its recent high profile achievements is integrating with Yahoo, putting Dropbox right inside your Yahoo Mail inbox. This allows you to move attachments directly from Yahoo Mail to Dropbox, without saving to your desktop. Want to share links to files in Dropbox? Skip the step of opening another tab; attach Dropbox file links as if you were sending regular attachments. This email to cloud integration streamlines the sharing and collaboration flow.

 

Why Yahoo, why Dropbox and why now? Understanding the Yahoo and Dropbox partnership enables us to better understand the direction of cloud collaboration, communication and the implication for productivity.

 

What does this mean for Yahoo, Dropbox and their users?

 

Just as Salesforce and members of its ecosystem have grown by working together, Dropbox and Yahoo are growing their respective businesses by working together. By working with Yahoo, Dropbox gets in front of users beyond its core “early adopter” base. By working with Dropbox, Yahoo gets associated with a “cool” Valley company and can provide a more comprehensive productivity suite than its previous offering. Given Gmail’s recent integration with Google Drive, Yahoo and Dropbox’s partnership help both remain competitive.

 

In the short and long run, users benefit from these integrations. If you’re using Gmail, you probably also use Google Drive, with 15GB of free storage. If you’re using Yahoo Mail, you can sign up for Dropbox and get 2GB of free storage (with an additional 14GB via referrals). By connecting their email with a cloud service, users can overcome some email limitations, such as the attachment size limit.

 

Google, Yahoo and Dropbox have validated the importance of connecting email inboxes (where you send and receive content) to cloud storage (where you save and sync files), as it simply makes sense. Over time, users will have more control of their email attachments and can save time with streamlined workflows.

 

What if you’re using other cloud storage services like Microsoft SkyDrive, Box, Bitcasa or SugarSync? You can connect these to your email inbox as well with Kloudless. With 23% of email market share, Outlook and Outlook.com users also have an option for email to cloud.

 

The additional flexibility to integrate multiple cloud storage devices means that users don’t have to pick a specific cloud service provider for email to cloud connectivity. Users can use the cloud services they want.

 

Why did Yahoo and Dropbox choose each other for this partnership?

 

For Yahoo, amidst their refocusing, working with Dropbox is a great opportunity to partner with a hot startup. Given some recent moves (including hiring Katie Couric, buying Tumblr and others), this partnership helps shed the tired, outdated brand image in exchange for an updated, hip brand. Unlike Google and Microsoft, Yahoo also does not have its own cloud storage offering. The Dropbox integration gives them instant credibility that rivals Google’s Gmail and Drive integration.

 

For Dropbox, this partnership is another example of how they are executing on their vision: “it just works” in the places that you’re used to working. They built a cloud service that connects with you via your desktop, a familiar place. Now they’re connecting with you in your email inbox.

 

Why didn’t this partnership happen sooner?

 

Several conditions needed to be met for Dropbox and Yahoo Mail to create this joint solution. First, Yahoo (and by extension, Yahoo Mail) needed to redefine itself to regain its former dominance. While the top seat saw quite a bit of turnover, it wasn’t until Marissa Mayer took the reins that Yahoo began to refocus on what was needed to create value for its users and shareholders.

 

Second, Dropbox and other cloud storage services were supposed to kill collaboration via email. Email attachments are painful — they have file size limits and the back-and-forth nature of the workflow kills productivity. However, we know people still collaborate via email. In fact, people now use email to pass links to their cloud files back and forth. By working together, Dropbox and Yahoo Mail were able to put together a service that benefits both of their user bases.

 

Third, some things are hard (or impossible) to kill off. Behaviors are hard to change, and sometimes people need to be in an already familiar context to be open to adopting new behavioral changes. Introducing cloud storage into email is such a step.

 

Are Yahoo or Dropbox signaling something with a deeper meaning to the cloud industry?

 

Several more companies will likely partner up like this. People use many different services in the cloud for productivity: email, storage, CRM, and others. It makes sense that companies want to give their customers the best cloud experience possible; sometimes this means playing nicely with others.

 

This partnering strategy isn’t unprecedented — Salesforce (NYSE: CRM) has a habit of partnering or purchasing Software-as-a-Service vendors whose offerings are complementary to its core product, a cloud CRM solution. Dreamforce, its ecosystem conference, is a testament to how Salesforce has grown by working smartly with partners, acquiring technologies that complement its own and ensuring its technologies help its customers grow.

 

The next several years will be interesting for the cloud industry. Technologies will advance to improve cloud communication, collaboration and productivity. Will you take advantage of connecting your email inbox to the cloud?

Eliot Sun

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