Bengaluru: Tech giant Microsoft Thursday batted for cross-border data flows but asserted that the same needs to be protected through suitable international measures and standards both legal and technical. Microsoft India Group Head and Assistant […]
Surprised? Youd be forgiven if you were, especially as mobile games seem to be taking over the handheld market. Sure, the 3DS has quite a few years on the latest consoles, having been introduced in 2011. Nintendo has said the 3DS has sold at least 50.41 million units since its introduction. The PlayStation 4 has sold just over 30 million units to date; Microsoft doesnt report sales figures for the Xbox One, but estimates put it at around 17.1 million units since its launch. And even with an increasingly sophisticated mobile gaming market, the 3DSs sales arent slowing down. In fact, according to Nintendos Scott Moffitt, the executive vice president of sales and marketing, theyre actually speeding up.
“So far in 2015, sales of the family of Nintendo 3DS hardware in America are actually ahead of last years pace,” he told The Washington Post.
For this holiday season, the company is focused on three main games for the 3DS. One is Legend of Zelda multiplayer called Tri Force Heroes, while another is a new addition to its Animal Crossing franchise called Happy Home Designer. Its also betting on sales of Yo-Kai Watch, a ghost-catching game thats been a hit in Japan.
Moffitt took some time to answer questions about the 3DS and its future in a mobile world. The following answers have been edited for length and clarity.
Q. Theres been a lot of discussion about handhelds and their continued relevance to the market, given the rise in casual gaming on smartphones. Whats the argument that Nintendo makes to consumers to say, “No, you really want a dedicated handheld gaming device”?
A. Nintendo 3DS is here to stay. Let me throw out a number that might surprise you. So far, on a global basis, Nintendo 3DS has sold more hardware than PS4 and Xbox One-combined. Most people find this shocking.
Obviously we dont deny the impact of smart devices on the gaming market. But its a mistake to consider this a zero-sum game. Clearly gaming on smart devices and gaming on Nintendo 3DS can happily coexist, to the benefit of all gamers. The fact is, playing games on two very different hardware platforms means options for two very different kinds of game play. The inclusion of multiple control buttons on Nintendo 3DS allows a much deeper and more sophisticated type of play.
Q. How do you see 3DS working with Nintendos growing interest in mobile games? Is there a way to make that a pipeline into handheld?
A. From our first mention of the intent to provide game apps for smart devices, weve been clear that we expect this expansion of our intellectual property to bring people to our dedicated platforms. So we intend to provide enjoyable experiences on both smart devices and our dedicated Nintendo 3DS line.
Q. Nintendo has faced some criticism in the past for not embracing the trend toward online multiplayer. “Tri Force Heroes” is a prime example of how Nintendo has built more social features into recent games. And it seems like the acceptance of these social features has worked more effectively in different markets. Are there different strategies for marketing social features to different markets? How do you view social as a part of game design going forward, and how do you balance online multiplayer vs. physical multiplayer?
A. Its true that markets do vary, and population density on average is higher in Japan than in the west. But the social aspects of Nintendo 3DS are enjoyable anywhere. As you know, Nintendo has always placed a premium on developing titles that can be enjoyed by multiple players in the same room. And this kind of fun is amply evident in games like Super Smash Bros., Mario Kart 7 and The Legend of Zelda: Tri Force Heroes. But at the same time, weve seen strong results in online play with franchises like Mario Kart and Monster Hunter.
And social is a major component of our plans moving forward. As you know, our first mobile app for smart devices, called Miitomo, is based on social interaction. We wont have more to say about that until next year, but with more than 200 million Miis already created, theres a unique opportunity for social interplay in a distinctly Nintendo fashion.
Q. Im sorry, but I have to ask about power adapters. [Nintendo infamously released the latest version of its handheld without an included power adaptor to some understandable consumer outcry, [since it adds another cost for new buyers.] Obviously, sales have gone up even without including the adapter, but Ive certainly gotten a lot of questions about that decision. Are there plans to include an adapter in the future?
A. Some people are disappointed that an adapter isnt included, but many arent concerned, since they upgraded from other Nintendo 3DS models or the Nintendo DSi line. Those adapters work just as well and theres no need for them to pay twice for the same thing. That said, if someone is buying a New Nintendo 3DS XL for the first time, they of course can buy an AC adapter, which is available at retailers. We are giving our consumers the option to buy only if they need an adapter.
Ã‚Â© 2015 The Washington Post
Gates told Hollande that energy innovation needed to be a top agenda item at the climate change conference now taking place in this airport suburb outside Paris. For years, Gates had prodded governments to increase spending on research and development of clean technologies. He had sunk $1 billion (roughly Rs. 6,687 crores) of his own fortune into startups working on new kinds of batteries and nuclear reactors.
“Honestly, Ive been a bit surprised that the climate talks historically havent had R&D on the agenda in any way, shape or form,” Gates, 60, said in an interview last week on the sidelines of the summit meeting, which concludes Friday.
The June tete-a-tete helped accelerate a sequence of events that led to one of the biggest public-private partnerships to tackle climate change, unveiled at the conference last week. Gates, who made billions from Microsoft before remaking himself as a philanthropist, was a linchpin of the effort, acting as an envoy between the worlds of business and policy.
His role in sealing the deal offers a peek into how the inner circles of governments and industry intersect. It also underscores how a handful of the worlds wealthiest people can stand with heads of state to spotlight a social, economic and policy issue on the global stage. For Gates, the worlds richest person and co-chairman of the biggest private foundation, it is another sign of how his vast foreign aid operation and status as a technology icon have turned him into a uniquely influential global diplomat.
Gates was drawn into the effort after the June meeting with Hollande and separate discussions with White House staff members in the summer. Hollande and President Barack Obama saw the tech mogul as a potential catalyst for achieving broad political and diplomatic goals at the climate conference. In particular, Gates renown in India as a tech founder and philanthropist gave the French and US governments a key emissary to get the Indian prime minister, Narendra Modi, on board with their climate goals.
Hollande and Obama agreed to work with Gates to assemble a coalition of governments to double their spending on energy research and development. For added heft, Gates volunteered to organize a group of billionaires to fund clean-technology startups. He reached out to his extensive network, including Jeff Bezos of Amazon, Jack Ma of Alibaba and Mark Zuckerberg of Facebook, all of whom agreed to participate.
Last week, on the opening day of the Paris meeting, Gates joined Obama and Hollande to introduce the coalition. It will commit 20 governments to doubling their renewable energy research budgets to a total of $20 billion (roughly Rs. 1,33,740 crores) over the next five years.
In addition, Gates and a group of other wealthy businesspeople agreed to invest at least $2 billion in clean-energy startups – with half the money coming from Gates himself. The group plans to finance companies that turn promising clean-energy concepts, some of which will originate in government labs, into viable products. Some of the companies will fail, Gates warned.
“Bill Gates is the intellectual architect of this,” said Brian Deese, a senior adviser to Obama on energy and climate change policy, referring to the group of private investors.
The partnership has already drawn criticism. With the new clean-energy fund, detractors say Gates and other members of the coalition are overly focused on energy moonshots that will take decades to pay off – if they ever do.
“Im perfectly willing to stipulate that countries underinvest in R&D, but it doesnt change the fact of the time frames involved,” said Joe Romm, a former US Energy Department official and a senior fellow at the Center for American Progress, a liberal think tank.
The new coalition also will not come close to supplying what is needed to make the global energy transition necessary to stop climate change. The World Bank has estimated the cost of such an effort at up to $100 billion annually.
Gates said the coalition was focused on early-stage investments but any breakthrough startups could raise more capital to finance deployment of their technologies. “The more than $2 billion we have committed right now is just a start,” he said. “As deals come in and the government pipeline increases, that number will grow.”
This account of how the public-private partnership came together is based on more than a dozen interviews with people involved in the effort, who spoke on the condition that they not be named because many of the conversations were private.
The seeds for a partnership were planted in January when Obama visited Modi in New Delhi. Obamas goal was to forge a close relationship with Modi, in hopes of finding common ground on climate change. During those conversations, Modi pointed out his challenge: He needed new electricity to help raise India out of poverty, but coal was the cheapest power source. He said India would use clean energy if there were tech breakthroughs that provided that energy inexpensively.
Modis message prompted Obama to consider how to achieve more clean-energy innovation. One idea was a multigovernment coalition to increase spending on clean technology.
Gates, meanwhile, had also been thinking about how to promote more energy innovation. His years building Microsoft had given him a Rolodex full of billionaire friends and a net worth of about $80 billion (roughly Rs. 5,34,960 crores). He and his wife, Melinda, have since set up the Bill & Melinda Gates Foundation, which has brought him into contact with many governments.
The foundation, whose endowment is now more than $41 billion (roughly Rs. 2,74,167 crores), says it has spent $34.5 billion (roughly Rs. 2,30,701 crores) in the 15 years since it was formed, concentrating on initiatives to alleviate world poverty, enhance global health and improve education in the United States.
Climate change has also been a concern for Gates, who has said that energy innovation needs government and industry cooperation. While governments are suited to do the basic research that produced the technical foundations for the Internet and other industries, he has said, companies need to bring those basic research breakthroughs into the marketplace.
In June, Gates met with Hollande to lay out his ideas. Over the summer, Gates also discussed the issue with Obamas top aides.
Both Obama and Hollande saw Gates as potentially helpful in wooing Modi to sign a climate deal in Paris. Gates and Modi met in India last year, engaging in a dialogue about toilets. Modi had vowed to end open defecation in India, which contributes to disease; Gates foundation has sponsored efforts to improve toilets.
In September, Hollande invited Gates and Modi to meet on the sidelines of the U.N. General Assembly in New York. Gates wanted Modis support for increased clean-tech spending, said a person familiar with Gates thinking.
At that meeting, the men discussed India, “saying, Come on, world, we need to do R&D” for more clean energy, Gates said. The two agreed about a public-private partnership to fund clean-energy innovation, with Modi even coming up with a name: Mission Innovation.
At the same time, the Obama administration solidified its idea of creating a coalition of governments to increase public spending on clean energy.
Gates also proposed creating a group of private billionaire supporters. To link it with the government coalition, he stipulated the billionaires would not invest in clean technology in a country unless that countrys government was part of the joint government fund.
Gates said he knew he needed patient investors, because energy technologies typically take decades to refine and deploy. So he reached out to contacts worldwide, including the Saudi prince Alwaleed bin Talal and the Indian industrialist Ratan Tata. In mid-September, he emailed Bezos, the Amazon chief, who agreed immediately to join.
Gates also emailed Neil Shen, an entrepreneur and venture capitalist in China. “He knows many parts of the global economy,” Shen said of Gates. “I think that kind of leadership fits very well to rally these kinds of investors in a coalition.”
Gates discussed the effort with Reid Hoffman, a co-founder and executive chairman of LinkedIn. At a meeting in Seattle this fall, Gates made it clear that he needed people to contribute meaningful amounts of capital, not just lend their names to the push, Hoffman said.
“Bill has committed to investing $1 billion of his own money,” Hoffman wrote in an email, “so in joining the coalition you have to put in real dollars.”
For Gates, the partnership is only a small step forward. “Given the scale of the challenge, we need to be exploring many different paths,” he wrote last week. “I hope even more governments and investors will join us.”
Ã‚Â© 2015 New York Times News Service
A winged craft traces the air, mapping a field with pinpoint accuracy for his start-up, a drone software company called Botlink. “They like drones, but theyve got a steep learning curve ahead.”
For years, entrepreneurs have come here to farm and to drill for oil and natural gas. Now a new, tech-savvy generation is grabbing a piece of the growing market for drone technology and officials want to help them do it here, where there is plenty of open space and – unlike in other sparsely populated states – lots of expertise already in place.
Silicon Valley has the big money and know-how, Muehler and others say, but North Dakota can take unmanned aerial vehicles, as the officials prefer to call drones, from a fast-growing hobby to an industry. And just as Silicon Valley got its start with a combination of military contracts, entrepreneurs and cooperative universities, they believe they can do the same with drones.
“The potential up here is tremendous,” said Jack Dalrymple, the states governor. “Its not about supporting a company or two; its creating the leading edge of an industry.”
North Dakota has spent about $34 million (roughly Rs. 224 crores) fostering the states unmanned aerial vehicle business, most notably with a civilian industrial park for drones near Grand Forks Air Force Base. The base, a former Cold War installation, now flies nothing but robot aircraft for the US military and Customs and Border Protection.
Right now, private sector drones are where personal computers were in the 1970s: a hobbyist technology waiting to become mainstream. The technology research firm Gartner says that, barring regulatory hurdles, the United States drone business could be worth $7 billion (roughly Rs. 46,269 crores) in a decade.
Companies are moving fast. Last month, Amazon released a video showing its planned delivery drone, and companies like Google and Facebook are working on big drone projects. DJI, a Chinese company that is the worlds largest maker of small drones, was funded last spring at a valuation of $10 billion (roughly Rs. 66,100 crores).
Small drones may bedevil cities with privacy concerns, even landing on the White House lawn, but rural states with farming, oil and rail lines see many practical reasons to put robots in the sky. Infrared imaging can judge crop health. Cameras can spot leaks and cracks in pipelines. Smaller copters can inspect windmill blades. Livestock can be located easily.
Judging from Muehlers proving grounds, if the occasional experimental craft crashes, it is unlikely to hit much beyond dirt. And with money, expertise, and need here, people will keep trying.
Grand Forks Air Force Base, 80 miles north of Fargo, has been an all-drone base since 2013. Big Global Hawk unmanned aerial vehicles, made by Northrop Grumman, fly reconnaissance missions from the Yukon to Venezuela from there.
In a smaller brick building in Fargo, Muehler was once part of a North Dakota Air National Guard unit that flies missions over the Mideast and Afghanistan.
Customs and Border Protection uses the Grand Forks field to patrol from Seattle to the Great Lakes with slightly smaller Predator drones. Sometimes those pilots take over from their Customs counterparts in Texas, patrolling the Rio Grande from screens 80 miles south of the Canadian border.
Where B-52 bombers stood ready with nuclear bombs in the Cold War, the countrys first commercial unmanned aerial vehicle industrial park is under construction. Northrop Grumman and General Atomics, the Predator maker, are taking space to train pilots for international sales of the craft.
Other businessmen are looking at modifying their craft for things like high-altitude surveillance of railroad tracks and pipelines. Involta, an Iowa-based operator of data centers that has already created a windmill inspection business in Grand Forks, is looking at building facilities specialized in collecting aerial information.
A company called Field of View, near the planned site of the industrial park, makes aerial sensing equipment. An outfit called the Unmanned Applications Institute is working with providers away from North Dakota on things like local drone manufacture and warehousing.
Nearby, the University of North Dakota, which already trains many of the nations commercial pilots and the air traffic controllers of some 18 countries, has 200 students learning to fly drones in a four-year program that started in 2009; 61 students have graduated from it. North Dakota State University, in Fargo, has also started teaching drone courses.
Besides military contracts and educational talent, North Dakota also has high-tech talent. In 1999, Amazon purchased an online seller of tools and home improvement gear in Grand Forks, and the company now develops customer service software there. In 2001, Microsoft paid $1.1 billion for Great Plains Software of Fargo, and it now has an office there.
The area has thousands of software engineers and not a few millionaires itching to get into the next big thing.
“Every top engineer in all of Fargo works for Botlink,” Muehler boasted. “We have the top 10 engineers in town.”
Muehler, who was educated as a pilot at North Dakota State, started on what became Botlink while flying missions from the brick building in Fargo. Dalrymple, the governor, refers to the military site as “once a well-kept-secret facility,” since its purpose has become common knowledge in the city of about 115,000 people.
One night in early 2014, Muehler saw a report on Fox News about a hobbyist drone that flew into the airspace at La Guardia Airport in New York. Thats when he hit upon the idea for his business.
“I figured there has to be some kind of software that can give awareness, let a drone know about things like boundaries and weather,” he said.
Alex Kube, a high school friend who was working at the same facility, started making the software. Seven months later, he spoke at a meeting of local entrepreneurs and collected $500,000 (roughly Rs. 3.3 crores) in angel funding from local investors. Botlink was formed several months later when Muehler met Terri Zimmerman, a former chief financial officer at Great Plains who grew up on a farm near the Canadian border.
“We want to be the Microsoft of the industry,” said Zimmerman, who is now Botlinks chief executive, and runs another company, Packet Digital, involved in low-power semiconductors used for, among other things, military drones.
So far, the company has raised $3 million (roughly Rs. 19.8 crores) more from private investors. “Thats like $14 million (roughly Rs. 92.5 crores) in Silicon Valley,” Zimmerman said.
Ã‚Â© 2015 New York Times News Service
The shift will basically mean the end of security updates and technical help for versions of Internet Explorer other than 11, the latest iteration. That could leave users clinging to the old versions more vulnerable to cyber-attacks against their computers because problems with the software that are discovered down the line wont be fixed.
“Regular security updates help protect computers from malicious attacks, so upgrading and staying current is important,” Microsoft says on a web page about the change. Internet Explorer 11 offers “improved security, increased performance, better backward compatibility” and support for modern web standards, it added.
There are a few exceptions: For example, Microsoft will continue to provide support for Internet Explorer 9 on its older Windows Vista after the deadline because its the latest compatible version for that operating system. But for the most part, users of old browsers will be on their own.
This change shouldnt be a surprise: Microsoft first announced the cutoff was coming back in August 2014.
Still, the shift will have a major impact on Internet users: By some estimates that means hundreds of millions of users will need to upgrade or be left at greater digital risk.
Microsoft is offering help for enterprise customers – organizations with more than 500 employees – looking to upgrade browsers before the cutoff. And that might be needed in some cases: Big companies and governments can be slow to move to the latest software because making those changes can be complicated to roll out across their organizations.
But most everyday users still running versions Internet Explorer 8, 9, and 10 can expect to get a final “End-of-Life” software update on the 12th that will include a prompt to upgrade their browser.
Ã‚Â© 2016 The Washington Post
Bosworth, a tall and grizzled but still trim 60-year-old, is a Johnny Appleseed of sorts in the tech industry, with a penchant for being intimately involved in the creation of generations of widely used technology.
While it is never easy to predict what the next big thing will be, identifying what Bosworth is working on is always good for clues. Right now, along with competitors at companies like Amazon and Google, he is building what some call a “data singularity.”
Imagine if almost everything – streets, car bumpers, doors, hydroelectric dams – had a tiny sensor. That is happening through Internet of Things projects run by big companies like General Electric and IBM.
All those devices and sensors would also wirelessly connect to far-off data centers, where millions of computer servers manage and learn from all that information.
Those servers would then send back commands to help whatever the sensors are connected to operate more effectively: A home automatically turns up the heat ahead of cold weather moving in, or streetlights behave differently when traffic gets bad. Or imagine an insurance company instantly resolving who has to pay for what an instant after a fender-bender because it has been automatically fed information about the accident.
Think of it as one enormous process in which machines gather information, learn and change based on what they learn. All in seconds.
“Im interested in affecting 5 billion people,” said Bosworth, a former star at Microsoft and Google who now makes interactive software at Salesforce.com, an online software company that runs sales for thousands of corporations. “Were headed into one of those historic discontinuities where society changes.”
It is lofty language, no doubt, but Bosworth and others believe they are on the brink of one of next big shifts in computing, perhaps as big as the Web browser or the personal computer.
But building an automated system that can react to all that data like a thoughtful person is fiendishly hard – and that may be Bosworths last great challenge to solve.
It is difficult to say just how big this business could be, but there are two good indicators: Analysts at Gartner estimate that by 2019 retail cloud computing – the data center side of the equation Bosworth is working on – will double in size, to $314 billion (roughly Rs. 20,79,772 crores). The sensors on objects will be a $2.6 trillion business, an increase of 250 percent, Gartner estimates.
Bosworth went to Harvard with Bill Gates, where he took just one class in computers while studying Asian history. He nonetheless landed a job on Wall Street, where he persuaded his bosses to give him $1 million for minicomputers – the cutting edge of computing before personal computers – that could deliver the first instant reports on how business was doing.
He got interested in techs next big thing, PCs, and wrote an early spreadsheet program. He joined Microsoft in 1989. His first years there were spent on databases, but as the Internet got big he helped turn browsers from software that looks up Web pages to software that interacts with the Web.
He and Gates repeatedly argued over the importance of the Internet, according to people there at the time. Gates may also have goaded Bosworth, knowing he is the sort who does not like to be told something is not possible.
“He sees out into the future, but not too far that you cant build something,” said Brad Silverberg, a Seattle venture capitalist who has known Bosworth since 1981 and was his boss at Microsoft. “If you want to make sure something gets done, tell him not to do it.”
The son of a demanding private school headmaster, Bosworth also clashed with Larry Page, Googles co-founder and chief executive, while working there on interactive software and a failed effort to build online health services.
“We had styles that werent synergistic,” Bosworth said. “He looks intensively at massive amounts of data-gathering, and assumes hell be able to do something with it using math. I was focused on getting people to communicate with other people.”
He left Google in 2007 to start Keas, an online health management company. He left in 2011 for Salesforce, but is still on Keas board.
Marc Benioff, the chief executive at Salesforce and a friend of Bosworth, asked him to look at the technology being used at the San Francisco company, which was founded in 1999 and was one of the first to use cloud computing technology.
Over lunch a few months later, Bosworth told Benioff that his once-revolutionary company was in peril.
“Computers are 50 times faster than when Salesforce started,” he said. “I told Marc, There is a whole new technology that is going to overtake you, the way the Web overtook Microsoft.”
That technology – the data singularity – is what Bosworth is working on at Salesforce.
If he is right, this new era in computing will have effects far beyond a little more efficiency. Consumers could see a vast increase in the number of services, ads and product upgrades that are sold alongside most goods. And products that respond to their owners tastes – something already seen in smartphone upgrades, connected cars from BMW or Tesla, or entertainment devices like the Amazon Echo – could change product design.
Analysts foresee a scramble to own and manage these systems and their data, and ever more power accruing to just a few companies like Google, Amazon and Microsoft, which already have the global computing systems and reach to make it happen.
“The idea is turning the world into a smart object that can be continuously improved, and we couldnt be more excited,” said Matthew Wood, general manager of product strategy at Amazon Web Services, or AWS, the retailers giant cloud computing business.
Few outfits have the engineering talent to manage this sort of thing. One year after starting the business, for example, Microsofts cloud handles 1 trillion sensor messages a week.
Salesforce, which is worth $54 billion (roughly Rs. 3,57,667 crores), is an underdog compared to that tiny group of tech behemoths. It lacks global data centers, but does control important data, like information about what customers are buying.
Who will ultimately control that data, from the sensors to the cloud and back, is one of the most contentious questions in tech.
“Youve got Amazon knowing everything about purchasing, Google knowing everything about what people do on the Internet, and Salesforce knowing everything about the revenue side of a business,” said Scott Raney, a venture capitalist at Redpoint Ventures who invests in companies related to what Bosworth is working on.
“Lay computer processing on all that, and its powerful to a point where a little creepiness sets in; no one else will have the data,” he added. “Im buying the stock of all the companies. I just hope theyll be benevolent dictators.”
Ã‚Â© 2016 New York Times News Service
Microsoft has tested a prototype of a self-contained data centre that can operate hundreds of feet below the surface of the ocean, eliminating one of the technology industrys most expensive problems: the air conditioning bill.
Todays data centres, which power everything from streaming video to social networking and email, contain thousands of computer servers generating lots of heat. When there is too much heat, the servers crash.
Putting the gear under cold ocean water could fix the problem. It may also answer the exponentially growing energy demands of the computing world because Microsoft is considering pairing the system either with a turbine or a tidal energy system to generate electricity.
The effort, code-named Project Natick, might lead to strands of giant steel tubes linked by fiber optic cables placed on the seafloor. Another possibility would suspend containers shaped like jelly beans beneath the surface to capture the ocean current with turbines that generate electricity.
“When I first heard about this I thought, Water … electricity, why would you do that? ” said Ben Cutler, a Microsoft computer designer who is one of the engineers who worked on the Project Natick system. “But as you think more about it, it actually makes a lot of sense.”
Such a radical idea could run into stumbling blocks, including environmental concerns and unforeseen technical issues. But the Microsoft researchers believe that by mass producing the capsules, they could shorten the deployment time of new data centres from the two years it now takes on land to just 90 days, offering a huge cost advantage.
The underwater server containers could also help make Web services work faster. Much of the worlds population now lives in urban centres close to oceans but far away from data centres usually built in out-of-the-way places with lots of room. The ability to place computing power near users lowers the delay, or latency, people experience, which is a big issue for web users.
Ã‚Â© 2016 New York Times News Service
But that isnt the image of Dropbox youd encounter in the news media. Two years ago, the company raised a round of financing that valued it at $10 billion (roughly Rs. 67,817 crores), making it one of the most highly prized startups of the tech boom. Now it faces a stock market that has turned unfriendly to initial public offerings of tech companies, not to mention stiff competition from publicly traded companies like Microsoft, Google and Box, the similarly named firm in a similar line of business.
As a result, Dropboxs valuation has been battered by a series of “markdowns” from large investors who appear to have turned skeptical about its future. For instance, the mutual fund manager T. Rowe Price now considers Dropboxs shares to be worth half what they were at the time of the last fundraising round.
So whats really going on at Dropbox? Is it thriving or dying?
Neither one, yet. When you look inside the company, you find something that defies Silicon Valleys typical straight-up or straight-down narrative: a complicated story of incremental and potentially accelerating success, but one clouded by outsize dreams of yesteryear.
Its a fate that other Silicon Valley startups may be facing, especially with the dip in public and private markets for funding tech ventures.
Dropboxs problems have less to do with the strength of its current business than with a delay, so far, in realizing the towering expectations that once surrounded the company. The startup is like the college basketball star who manages to turn pro but is still regarded with doubt because everyone has now realized he might never be the next LeBron James. What happens to a company once thought to be worth $10 billion when it turns out to be worth only $5 billion (roughly Rs. 33,908 crores), or $2 billion (roughly Rs. 13,563 crores)?
According to Dropboxs executives, nothing too terrible – it can just wait out the market freeze and perhaps grow into its $10 billion valuation. In other words, Dropbox can keep working and may yet turn into LeBron.
“Sentiment about companies goes in cycles,” Drew Houston, Dropboxs co-founder and chief executive, told me in an email. “Google, Apple, Facebook all went through multiple rounds of this. First, you can do no wrong, then you can do no right. Then people are like, Actually this is a pretty good company, and around it goes. So you have to ignore the noise and stay focused on building great products and making customers happy. The rest will take care of itself.”
At the moment, executives said, Dropbox isnt in any urgent danger. If it were running out of money, it might be forced to raise funds at a lower value than its previous one – a dreaded “down round” – but executives and board members said the company had plenty of money in the bank and was generating enough from operations to fund an expansion into new products and services.
Other numbers are also promising, they said. More than 400 million people use the companys service – a place to keep documents online, so they can easily be shared and synchronized among different people and different computers – and the service is adding 10 million users a month. Dropbox also has 150,000 business customers, who pay annual fees of about $150 for each employee, and those ranks are growing by about 25,000 businesses a quarter.
Insiders declined to specify Dropboxs revenue and growth rate, other than to say there had been increases since its last funding round, when the companys annual revenue was reported to be $400 million (roughly Rs. 2,712 crores).
Executives also said employee retention and hiring have not been hurt by the recent news. I asked several tech recruiters if they had noticed a diminished interest in working for Dropbox; none had. In the last year, Dropbox has hired from Facebook, Google, Microsoft and Twitter.
“Dropbox is growing on the same trajectory as the best software-as-a-service companies ever – like LinkedIn or Salesforce,” said Bryan Schreier, a Dropbox board member and a partner at the investment firm Sequoia Capital, which has invested in the company. “I dont know how we couldnt be thrilled with that kind of performance.”
But if Dropbox can still thrill its backers, it has also accumulated a chorus of skeptics. The company is one of several looking to ride two tidal waves now sweeping the business world – the trend toward business software that doesnt stink, known as the “consumerization of information technology,” and the rising willingness of companies to store their most precious data on online servers, or in the cloud.
Dropboxs issue is that its products for business customers are relatively new compared with those of its rival Box, which was founded before Dropbox and began focusing on business users earlier. Dropbox is behind Box in attracting the most lucrative segment of the market – the largest companies who will pay the most to get their data online.
Adding to this is the complication that Box, which has had to spend hundreds of millions of dollars building out a sales team to go after large companies, has been pummeled by investors for its persistent losses. The stock market now values Box at about $1.3 billion (roughly Rs. 8,816 crores), about half of its value when it went public in January 2015.
This sets up an unfavorable comparison for Dropbox: If Dropbox trails Box in the meatiest part of the market, and if Box is itself losing money, how can Dropbox possibly be worth 10 times as much as Box?
Dropbox argues that comparison with Box doesnt take into account the differences in the two companies business models. Sure, Dropbox is developing its sales team and expanding its product offerings for businesses. But Dennis Woodside, Dropboxs chief operating officer, said that its broad brand recognition makes the sales process more efficient – and thus cheaper – than Boxs.
When Dropbox visits a companys chief information officer on a sales call, it has something Box struggles to show – a large base of the companys employees who are already using its service.
“We fish in a pond thats used to our product,” Woodside said.
In the last quarter, Dropbox signed up 13 large companies with more than 1,000 users each, he said, three times as many as in the same period last year.
Schreier of Sequoia Capital said Dropboxs potential for profit was more attractive than Boxs, and argued that when Dropbox eventually goes public, investors will recognize that difference.
Aaron Levie, Boxs chief executive, disputed this assertion. “Our differentiation and maturity in the enterprise market is what wins those customers,” he said.
A large and costly sales team also makes a difference, Levie argued, which is why he seemed to scoff at the notion of Dropbox as a competitor. “Were mostly competing with Microsoft in the enterprise, not Dropbox,” he said.
Because one company is public and one is private, and because they operate so differently, it is difficult to say whether Box or Dropbox – not to mention Google or Microsoft – will ultimately run away with the enterprise cloud services business. Analysts say that at the moment, the market is big enough, and wide open enough, for all of these companies to thrive.
The murkier issue is not whether Dropbox can build a good business, but whether it can ever become the $10 billion goose that investors had once seen it as. Reports of Dropboxs demise are premature. But so are reports of its comeback.
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