Case Question 1 – DropBox
1. Dropbox is a late mover in a crowded space. What opportunity did Houston see? Specifically, what are the key elements of Dropbox's current business model?
Houston saw the opportunity to build a product which would allow the users to upload their work and synchronize them immediately. Houston came up with this idea as he felt the need of this product by himself by forgetting his USB stick as he wanted to work in the bus. So Houston decided to start and develop a prototype of his idea. This prototype would allow its users to upload their files and use as much data space as needed. Regarding the business model Houston and Ferdowsi invented some several key elements in their product. One of the first key elements was that users were able to access files of any size or type via Internet connection. And the Dropbox client software was able to track changes in real-time to any file placed in the user’s local Dropbox folder. Another key element was the one-single product policy. They didn’t want to offer advanced or customized versions. Dropbox as a company just earned money from its users if they are willing to pay -they could add additional storage by paying a small fee. Which also developed one of the most success; as Dropbox is really user-friendly they could use the word-of-mouth advertisement to increase their user base in a large way. Dropbox used also some beta versions to see how customers would like it and how they could improve the current version.
Is Dropbox profitable as of June 2010? Are you optimistic about its prospects? How does your estimate of Dropbox's current profitability influence your evaluation of the venture's prospects?
I would say Dropbox will be profitable as of June 2010 and I’m optimistic about its prospects. As Houston had invented a good product and marketing strategy, he was able to focus on the growth of Dropbox and use the growing market his advantage. As IDC projected an...
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