Box's future lies in developer tools

Developer platform will 'eventually' generate more revenue than storage

For a decade, Box has built its business on selling cloud storage services, but the company is now making a move in a slightly different direction.

At BoxWorks, the company announced the availability of its Box Platform, a service that lets developers use Box's infrastructure to power the experience of handling files inside their apps without letting end users know that the functionality is being provided by another party. It's designed to make it easy for companies to focus on the core functionality of their app without having to worry about a powerful back-end for managing and displaying files securely.

When developers integrate their app with the Box Platform, they can take advantage of the company's investment in things like compliance with key regulations in markets with heavy oversight like banking and medical applications. That frees them up to focus on the core functionality of their apps, and leave storage management to Box.

"If you're a retail bank, and you're building a retail banking experience for your customers, focus on that experience and let us do the content services in the back," Jeetu Patel, the company's chief strategy officer, said in an interview. "We'll power your application with it, and we'll make it cost-economical for you to not [build your own content services backend], and we'll give it to you at a fraction of the cost of what it would take for you to go out and build it."

Box wants to be a content services platform in the same way that Stripe is a payment services platform. Developers who use it to build the backend of their apps can implement features like rich previews of files, tracking files and giving users the ability to add comments.

It could be tempting for companies and developers to try to replicate internally what Box offers in order to save money in the long term, but Patel thinks that the company's offering is so broad that businesses won't want to mess around with trying to build it themselves.

"If someone could trivially do it with a couple of people at night, then more power to you, but chances are that you're not going to be able to do it," he said.

Patel sees Box's future paved with its platform ambitions, and went so far as to say that he expects services to developers will eventually be the company's biggest revenue stream. It's the sort of move that could allow Box to reach hundreds of millions of users, many of whom won't even realize it.

"I would say that most people will have used Box, but [won't] even know that they have," he said.

If that comes to pass, it has the potential to be a much larger market opportunity, especially since Box faces less intense competition providing developers with a content services backend platform compared to the cloud storage market.

All of this comes as Box has been trying to weather the challenges of being a public company. Right now, shares of Box are trading well below the company's closing price after its initial public offering last year, and investors have grown increasingly concerned with the company's seemingly consistent inability to turn a profit.

Offering these services to developers could pay off in a big way in the long run, but that requires a lot of companies to start using Box's platform. App development is rarely a quick process, which means it will likely take quite some time for Box to see massive revenue growth from it.

There's also the matter of a potential acquisition. Patel said that the company thinks it can do best by staying independent, but a platform offering like this one could make it an attractive purchase for a cloud platform provider like Amazon or Microsoft that's looking to differentiate its services.

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Blair Hanley Frank

IDG News Service
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