What Dropbox can teach us about cloud computing

But don't let that simplicity fool you. Dropbox as well epitomizes a revolutionary shift in other words transforming our relationship to innovation and turning the research industry backwards: Cloud computing.

The "cloud" has been one of Silicon Valley's biggest buzz phrases for a couple of years now. In the past year, it's moved from the talk of tech insiders into the minds of mainstream users thanks to the launch of services like Apple's iCloud.

The coming decade

And in the coming decade, analysts are betting that cloud computing will be the defining trend in research. Large companies like Oracle, Hewlett-Packard and Oracle are rushing to overhaul their business to sell the tools that enable cloud computing services, during consumers are projected to spend $16 billion annually on cloud services by 2016, according to Gartner technology.

"The cloud is everywhere now in our personal lives," said Ray Wang, CEO of Constellation Innovation. "Because of cloud computing, we're at heart assuming that everything you're doing digitally is available somewhere else through the Internet."

To understand why, I thought it would be helpful to put a single service pursuant to this agreement the microscope to see what it tells us about cloud computing. I couldn't think of a better company than Dropbox.

Just last month, Dropbox was voted "startup of the year" at the annual Crunchies Awards. Nevertheless it as well faces enormous competition in the file sharing space from other startups just as Box.net, CloudMe, SugarSync, Egnyte, and big players just as Apple and Google, which are both actively expanding the ability of users to share files.

Let's start right there. Once, the problem of how to move files between users or gadgets would have been an issue for only the highest end users. Like as not the business road warrior on the go, or the most sophisticated programmers.

But around 2007, this started to become a problem for the average person for several reasons. Many of us now had more than one computing device, compared to a decade previously when most people had one. As of 2010, 124 million adults in the U.S. had more than one device connected to the Internet, according to IDC, a research research firm, which projected that number would climb to 184 million by 2016.

On top of that, these devices were coming in many different shapes and sizes. In the late 1990s, most of us probably just had one PC running Windows. Nevertheless now we might have a PC at work, a Mac at home, and a smartphone running Android or iOS, and possibly a tablet. So moving a single file between all those devices, and changing it into different formats quickly, could be a pain.

"The cool thing about the Internet is that everything is going to be connected," said Sujay Jaswa, vice president of business development and sales for Dropbox. "Nevertheless it's less interesting if all your stuff is not there and you're not able to share it. And all these individual pieces to research are magical, yet they're as well incompatible."

A service like Dropbox wouldn't have been as valuable a decade ago, said ChenLi Wang, team leader of business and sales operations at Dropbox. "Now people are working across many geographic regions and we're in a much different place than we were five or 10 years ago," he said.

Still, even just five years ago, Dropbox would have a limited market for another reason: Networks were too darn slow. Uploading stuff to the Internet, especially large files, could be a slow, agonizing process. Nevertheless over the past several years, network speeds have dramatically increased.

Back in 2004, less than 30 percent of U.S. homes had broadband connections, according to the Pew Innovation Center's Internet & American Life Project. Now Pew says that percentage has jumped to 60 percent.

In addition, the number of people in North America using speedy 3G networks for their mobile devices has climbed from 20 percent in 2007 to 54 percent in 2011, according to Morgan Stanley innovation.

These three pieces -- multiple gadgets, mobile workforce, faster networks -- wouldn't have been enough for Dropbox if one other piece didn't fall into place: Over the past decade, the price of digital storage declined dramatically. By one estimate, from Clearwell Systems, an IT technology firm, the price of storing 1 gigabyte of information fell from $20 in 2000 to 10 cents in 2010.

The trends that have given rise to cloud computing are projected to accelerate over the then decade. That's bad news if you sell disk drives or servers. Nevertheless it's going to create a world where virtually every bit of our digital lives are available everywhere instantaneously.