Channelnomics

Box Sees Channel as a Growth Catalyst

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Box isn’t a company easily defined, as its cloud services go by many names – collaboration, content management, backup and file synchronization. Regardless of what Box’s services are called, it’s one of the hottest companies in Silicon Valley, flush with more than $125 million fresh funding and a goal of becoming the next billion-dollar company.

Now, Box is looking to tap the power of the channel to propel its growth. Chris Penner, Vice President of Channel Sales at Box, tells Channelnomics that the channel goal is to raise current revenue contributions from 10 percent to 25 percent of growth over the next three years.

Box today unveiled a new channel initiative in which it’s working with OEM vendors, developers and resellers to enhance and expand its channel revenues. It’s already signed more than 50 resellers worldwide, signed on with distributor Ingram Micro in North America and SDG in the United Kingdom, and expanded relationships with vendors such as Autodesk, AtTask, Marketo and Xero.

Box is positioning its announcement as the launch of a new channel, but the company is hardly a stranger to solution providers. The content and collaboration company, which is commonly compared to Dropbox except it’s for business, has dabbled with channel partners for at least the last four years. The expansion of channel efforts comes as expectations for Box to grow increases.

Penner doesn’t mince words when speaking about Box in the channel. The combination of OEM relationships, application developers and resellers will not just provide the company with routes to market, but multiple routes as the OEMs will, in theory, feed Box services to their downstream partners.

The expectations are high. While channel revenue targets are modest, the actual amounts could be quite substantial given Box’s growth.  As a private company, its current and projected revenues are unknown. However, the company was valued at $600 million in 2011 when it turned down a takeover offer by Citrix Systems. In 2011 it raised more than $80 million and last summer it added another $125 million to $150 million in venture capital to fund expansion.

With such high levels of investment, the expectations for Box to succeed and produce strong returns are quite high. Hence the reason for engaging channel partners.

Penner says Box is receiving tremendous interest from partners in incorporating or reselling its services. What’s unclear is whether the attraction is to the endless buzz being generated by the company’s promises of growth or the ability to operationalize collaboration services as a channel practice. Equally unclear is how Box will manage channel conflict in an organization that is largely oriented toward direct sales and on an accelerated growth trend.

While Box is often compared to Dropbox, the more apt comparison is Microsoft’s popular SharePoint application. If Box is able to gain a foothold in the channel, it could prove disruptive to other file sharing and collaboration services, but also one of Microsoft’s cash cows. Given the brand recognition and funding, Box seemingly has a good chance of leveraging the channel to reach its goals.

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