Box faces tough campaign for health, retail, and entertainment clouds

Box's move to add services for vertical markets smartly avoids the race to the bottom in cloud storage, but the road isn't easy

Box CEO Aaron Levie announced yesterday a major new direction for the business-oriented cloud storage provider. Called Box for Industries, it's Box's services tailored to industry verticals previously unreached by Box or its brethren.

It's a crafty move, given the cloud storage market's race to the bottom, and every bit of differentiation counts. But there's a difference between announcing the strategy and executing it in a way that gives Box a real edge.

Right now, cloud storage is dominated by Google, Microsoft, and Apple, all of whom have made it tough for third-party outfits to interoperate with their mobile productivity tools. Those third parties -- at this point mainly Box itself, the consumer-oriented Dropbox, and a smattering of other players -- are stuck in a cycle of plummeting prices and rising storage allotments. Many business plans have no storage caps; it's only a matter of time before the for-free tiers of those services start offering something similar (albeit perhaps with bandwidth constraints).

Box is looking to verticals as a way out of that spiral, as those customers have sharply defined business needs that are not met by the generic offerings of other services.

Alan Pelz-Sharpe, research director for social business applications with 451 Research, affirmed that Box has a chance here to do something self-distinguishing and even successful. "There are many real world content/file-centric opportunities for [Box] to explore and even get early wins in," he wrote in an email. "For example, invoice and contract management, field sales and work enablement etc. Verticals like health care, engineering, and manufacturing are more open to new ideas around mobilizing their work and workforce than ever before."

But breaking into those spaces isn't simply a matter of offering desired features or integrating with existing workflows. It's also about unseating existing players on a timeframe and a scale befitting a company with a lot of money -- and a $250 million IPO -- riding on its promises.

The existing competition is challenge enough for any one company, as a number of other relatively anonymous players have already staked out space in the same verticals Box is eyeing. Intralinks, for instance, is a provider of enterprise collaboration and storage solutions that bills itself as having a well-established customer base in manufacturing, legal, life sciences, real estate, and other verticals. Another file-sharing and collaboration outfit geared for verticals, Accellion, boasts its own roster of vertically oriented clients and pushes its products as competition for Box (and Dropbox and OneDrive).

Pelz-Sharpe also agreed that the existing players in the space would be tough to ease out. "Incumbent business application players in these industries are unlikely to simply roll over," he noted. To him, the biggest challenge Box faces is time -- time to close more and larger deals, and time to get more credibility and traction in those verticals. "As meeting the often unrealistic financial expectations of its investors (who may not be in this for the long game) is going to be difficult for them," he wrote, "I think what Box is doing right now is good, but it's not a magic wand."

This story, "Box faces tough campaign for health, retail, and entertainment clouds ," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.