Technology

Dropbox Reaches 500 Million Users, but Do They Have Value?

Douglas A. McIntyre

Published: March 8, 2016 6:48 am

Last Updated: January 13, 2020 12:15 pm

Online storage company Dropbox reached a milestone as its user base hit 500 million. It is not clear that Dropbox can turn that into value, as far as investors are concerned.

Dropbox founders Drew Houston and Arash Ferdowsi announced:

With 500 million signups under our belt, it’s exciting to see Dropbox connecting people around the world with everything that’s important to them. But this milestone hints at something much bigger—how much our users are working together.

Since we started, Dropbox users have created 3.3 billion connections by sharing with each other. That’s a 51% jump in just the last year. And as new people join, they’re bringing friends, family, and co-workers along. 44% of new accounts were opened when existing users introduced people to Dropbox. That’s making for an even more creative and collaborative community.

As several large companies with hundreds of millions of customers online have shown, the value of those customers may be very limited. The primary example of this is Twitter Inc. (NYSE: TWTR), which has lost 65% of its market cap in the past two years. The anxiety about Dropbox is that several other companies offer similar services. Crunch Base names 35 of them, which are not large companies like Microsoft Corp. (NASDAQ: MSFT), Alphabet Inc. (NASDAQ: GOOGL) and Apple Inc. (NASDAQ: AAPL). Each of these companies has hundreds of millions of customers and probably is willing to lose money to get market share in the cloud storage business.

Dropbox has 500 million users and a business that could be swamped by an army of well-heeled competition.