Standing Out in a Sea of Storage Startups

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One of the services that seems to be doing quite well is Mozy, which was acquired by EMC (EMC), mostly because it had started to sell to larger companies. Mark Lewis, an EMC executive, was quoted as saying that Mozy may be popular with consumers, but it is a perfect solution for large companies as well. The company hasn't revealed how many people are using the service, but Mozy.com does get about 100,000 people checking it out every month, according to Compete.com, a Web site traffic tracker.

Collaborative Effort

So what are the options for surviving in the online storage business? Actually there are a few tricks that can help startups both stand out and thrive. SmugMug, for instance, has used Amazon's (AMZN) S3 as its back end to offer a for-pay niche service optimized for professionals like photographers and is building features such as watermarking. Of course, these opportunities are few, and folks including SmugMug have already staked out their position.

The other option is to shift focus away from storage to "collaboration." Using online storage as an underpinning to share documents, files, and folders with people in your network (whether consumer or corporate) is the right approach.

Microsoft (MSFT) is doing quite well with its SharePoint service, which is essentially storage layered with other services. Chris Capossela, corporate vice-president in charge of the Redmond (Wash.) giant's business division, described SharePoint as "the Office suite for the next generation." This service is so popular that it's expected to bring in about $1 billion this year for Microsoft. What's working well for Microsoft, and to some extent, Google (GOOG), is that they are treating storage for what it is—a cheap throwaway service—and layering it with more valuable ones.

One company that seems to have gotten the "collaboration memo" is Box.net, a Palo Alto (Calif.) startup that has developed an open-collaboration strategy. Box.net is using its API to interface with other Web services such as Autodesk (ADSK), EchoSign, eFax, Myxer, Picnik, Scribd, Zazzle, ThinkFree, and Zoho, and in the process becoming a major collaboration platform that rivals SharePoint. Box.net calls its strategy OpenBox.

This is an offering that Box.net CEO Aaron Levie can sell to businesses—big and small—as a service for a monthly fee. And perhaps that is one way he can avoid the fate of some of his more prosaic rivals.

Provided by GigaOm—