B2B Payments

Amazon’s Hand In Dropbox’s Success

Still a private company, Dropbox has been guarded about the details of their business, however when it finally files for its much-anticipated IPO, the fling may show that their finances will be awarded an A+!

Dropbox is expected to show even spending, particularly for the higher-cost items, partially due to Dropbox’s close relationship with Amazon Web Services. The is a long-term partnership that has Dropbox using the Amazon S3 storage service is believed to have given Dropbox the type of pricing structure that enables the company to keep technical expenses manageable.

Alan Pelz-Sharpe, research director for social business at 451 Research explained “Dropbox is clearly one of the biggest AWS users and they’ve been with them right from the beginning — they work very, very closely with them, I’d think that they’ve got one of the sweetest deals going, frankly.

AWS enables Dropbox to hold to a flexible model that allows the company to buy more space as the number of subscribers increases. On the other end, the company can save costs if there is a retraction in the number of subscribers or in the demand for storage. By using AWS, Dropbox has reduced the risks of weaker margins that come with the build out of a private or hybrid datacenter model.

This partnership has given a smooth time in securing cheap funding with its easier-to-understand business model and high-profile brand. Perhaps the most important point that Dropbox has made is that they can make the freemium model work. The company’s reported procurement of a more than $500 million credit facility recently is expected to see the majority of that being used to expand Dropbox’s international footprint and ramp up significant acquisitions

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