File Synch Services Open New Opportunities

The proliferation of IP-enabled devices, ranging from PCs to smartphones, and end-user desires to access files at any time from any device are driving demand for a new type of service – file synchronization and sharing. Companies like Box.net and Dropbox have grown from near obscurity to being poised as the next big thing in cloud-based services. And these companies are looking to the channel to take them out of their consumer roots.

The latest file-sharing and synchronization vendor to venture into the channel is YouSendIt, a service that started out as a light-weight FTP alternative. Users have utilized YouSendIt to transmit files that were often too large for email. Increasingly, though, YouSendIt is being used as a means for passing files and documents between devices.

YouSendIt wants to capture business users and accounts, and sees the channel as the mechanism for taking it there. Earlier this week, it announced the appointment of Sean Jacobsohn as the head of worldwide alliances and channels, as well as a reseller agreement with direct-market reseller PC Mall.

“YouSendIt has all of the elements of a company poised for a rapid ascent,” said Jacobsohn. “By using YouSendIt’s secure cloud-based solutions, channel partners will enable their customers to collaborate efficiently, cost-effectively and securely while freeing up IT resources by reducing internal storage requirements, Exchange server traffic and help-desk calls.”

And that’s the basic value proposition all file synchronization services share. As users carry more mixed-use devices – for work and personal needs – they need services that can traverse networks seamlessly to provide access to the same information. Until now, that was only possible through centralized servers that end users couldn’t always access outside the firewall. Even then, files had to be manually retrieved.

Companies like Box.net and Dropbox popularized the concept of file synchronization as a means for collaboration. Users could put a file in the cloud service, and it would automatically propagate to all connected devices and users. This made data access relatively easy.

Box.net raised eyebrows recently when it secured $85 million in fresh funding for business expansion and channel development. Investors and analysts see tremendous potential in the file synchronization service as more businesses allow their employees to use personal devices for work and to fulfill collaboration needs among workgroups.

Box.net has always been business-focused, although it does have a strong consumer and semi-professional (individual subscribers using the service for work purposes) base. It’s been developing a channel for months, hoping to tap managed service providers and value-added resellers in a bid to acquire more mid-market and enterprise accounts.

Another company getting a lot of attention is Dropbox, which really popularized the notion of file synchronization. Millions of consumers use Dropbox to pass files between smartphones, tablets and PCs. The popularity and growth of the business led investors and analysts to give Dropbox a $4 billion valuation.

Dropbox has been criticized for its security. Earlier this year, Dropbox left thousands of account credentials exposed, resulting in files being open to compromise. Security experts have charged Dropbox as being a source of malware distribution and unsafe for sensitive documents.

With ambitions of moving into the enterprise market, Dropbox last week launched Dropbox for Teams, a service designed for business accounts with more stringent security measures. While Dropbox doesn’t have a channel program, per se, the likelihood of one being developed is high.

While Box.net and Dropbox are arguably the best known and most popular file synchronization services, they are not alone. There are more than two dozen similar services on the market, and many are looking to channel partners to aid in their development. Chief among them are TappIn, Evernote, TappIn and Trend Micro’s Safe Sync for Business. Each of these positions itself as an easy, safe and cost-effective means for sharing files and collaborating.

These services compete against well-established business software and collaboration vendors. Box.net makes no bones about competing directly with Microsoft SharePoint. Arguably, these services are also up against offerings such as SugarCRM’s SugarSync, Google Cloud Drive and IBM’s Lotus Live Notes.

From a channel perspective, these services are interesting, but haven’t found their footing. While each offers attractive annuities and margins to partners, the average sale price remains lower than conventional on-premise backup servers with managed services. And there are questions as to whether synchronization is truly a business application or a consumer service that enables some business activity.

Businesses also harbor concerns about security, as seen with Dropbox. But these security concerns go well beyond malware. Encryption and access control inconsistencies and omissions among these services leave some open to regulatory compliance issues and violations.

Security and operational concerns aside, Dropbox, YouSendIt and their ilk have exposed a real need for easier access to files. As mobile and consumer devices proliferate in the enterprise, end users will want to have their data where and when they want it. Businesses, too, will want synchronization for its collaboration and project management benefits. What this adds up to is a new opportunity for solution providers looking to satisfy the growing needs of the interconnected, blended-use computing era.

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Lawrence M. Walsh is CEO and president of The 2112 Group, a technology business advisory service that specializes in optimizing indirect channels and partner relationships. He’s also the executive director of the Channel Vanguard Council. He is the former publisher of Channel Insider and editor of VARBusiness Magazine. You can reach him at lmwalsh@the2112group.com.

On Twitter:
Larry Walsh: @lmwalsh2112 | Channelnomics: @channelnomics

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