Microsoft’s Ambitious Cloud Storage Strategy — Partnering with their Compeititor

Microsoft has been developing a really powerful cloud offering over the last few years. In essence, on the consumer / enterprise front, it wants to be the glue that links your online personas between whatever device you use, be it a PC, Android phone, iPad. And OneDrive, through Office 365 is a really important part of this offering.

Microsoft knows it’s lost the OS platform war, but there’s a potential for them to gain a strong foothold (if they haven’t already) in the cloud platform war.

So, it may seem strange that yesterday Microsoft announced close integration between Dropbox and Office 365.

For Dropbox, this looks like a win-win. They know that firms use Dropbox and that integration with the software that runs most of the files they save is going to reduce the friction for users.

Surely, this is going to dilute Microsoft’s strategy? Having to integrate with a competitor like Drobox might slow down feature roll outs?

However, Microsoft has two gains from this:

  1. This move stops Dropbox from partnering with anyone else, like Google. Microsoft with this deal is not giving any Dropbox users a reason to switch productivity tools.
  2. Short term, Office 365 integration with Dropbox is going to focus a lot of eyeballs on the potential for OneDrive — with unlimited storage. I can see an accountant looking at the fact that a firm pays for both a Dropbox Business plan and an Office 365 plan which contains equivilent features and ditching the former.

For this to work, Microsoft has to have a better product, which is why it’s great that they have the confidence to make such a deal. This is really Microsoft’s core comptency and with the resources at their disposal I do wonder if medium term we’re going to see some customer leakage from Dropbox.