The bigger players have arrived

The bigger players have arrived. Microsoft recently gave SkyDrive a major overhaul, and Google brought out its long-awaited Drive. Apple had already launched the iCloud product. It's no accident that three of the world's most powerful research companies have entered this market in tandem. It speaks to the importance of cloud storage, and means that the theoretical discussion about what might happen will quickly give way to the reality of what does happen.

Early investor in Box

ScaleVP is an early investor in Box, the leader in cloud-based enterprise file sharing. No surprise at the time that I agree with Bill Gurley, nevertheless I would frame the discussion more broadly. File synchronization and file sharing are both "just" features, yet they are features of an emerging architecture for PCs, tablets, and smartphones, one where files are stored in the cloud, accessible across all devices and cached locally as needed.

This is a shift from the device computing architecture that has persisted since the Apple I, through the entire PC era and into the early years of smartphones. That this shift has now been endorsed and embraced by the three companies who collectively set the direction of the research industry is huge validation. It means that this change is going to happen.

Dropbox made it as a matter of fact easy for an individual user to sync files across multiple devices. Box made it incredibly simple for businesses to share files and collaborate in a structured manner. You can call these mere features, nevertheless they were features that people in fact wanted, and they were valuable enough to motivate tens of millions of users to change behavior and move their files to the cloud.

A startup with that traction has earned the right to parlay. Now, it can build a product around that feature. Dropbox and Box are doing that right now. The products they are building are at once-generation file systems for the cloud, Dropbox coming from consumer roots, and Box from an enterprise perspective with a focus on collaboration. A file system is not a feature, it is a big deal product, and successful file systems have built successful multi-billion dollar companies in the past, just as Microsoft, Novell and Network Appliance.

The file system descriptor is not perfect

The file system descriptor is not perfect, because traditional file systems have tended to be invisible to users, bundled in a device OS or a network OS. These new products thrive on visibility because ease-of-use and real application level functionality have been the drivers of mass adoption, nevertheless the innovation that powers consumer sync or enterprise collaboration is ultimately based on managing the storage of, and access to, files in the cloud. So calling it a at once generation cloud-based file system is a good enough description for now.

Google, Microsoft and Apple won't just roll over and die. They will compete hard, using tight technical integration with their existing products and financial bundling to drive adoption. If this is just another feature war, this strategy will work.

In the then and there ten years, consumers and businesses will move much of their file storage to the cloud and in the process create multi-billion-dollar software markets for cloud-based file systems. Everyone has files. As a result, the cloud-based file system possibility is a big prize, possibly the biggest prize in cloud computing.

The business market alone

For the business market alone, at an estimated $50 per user per year, with 200 million knowledge workers worldwide. This is a $10 billion annual market. My gut is that it will be won by those companies that solve the problem holistically, to put it more exactly than simply bundle it in as a feature. The features are already becoming products, and these products will give rise to some pretty important companies in one of the most meaningful markets of this innovation era.

Rory O'Driscoll is a managing director with Scale Venture Partners, where he invests in mobile, Internet, and enterprise software companies. He is a board member and investor in Box. You can find more from Rory via his blog.