June 16, 2017
Jason D. Rowley is a venture capital and technology reporter based in Chicago.
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On Wednesday, Google announced it will roll out a new feature to its Google Drive cloud storage offering called “Backup and Sync,” which will replace the current Google Drive client with an application with better system-level integration.

Available by the end of June, the new feature will enable “consumer” (i.e. non-enterprise) Google Drive users to automatically back up select folders on their desktops to Drive.

A Google spokesperson contacted by Crunchbase News clarified that users will not be able to make bulk backups of their entire machines using Backup and Sync, but they will be able to selectively backup any folder on their computers they point it to.

Intense Competition for Cloud Syncing And Storage

It was only a matter of time before a Big Tech Company backed its way into the online file storage market in a big way, which has been largely dominated by comparatively modestly-sized companies like Dropbox and Box. Of course, Apple, Microsoft, and Amazon all have their own consumer cloud storage options, but they haven’t gotten as much traction as Google Drive, Dropbox and Box.

According to a recent analysis of cloud storage use by CloudRail, a cloud integration service provider, Dropbox and Box, collectively, account for a significant majority of the user base for cloud data syncing services. Based on an analysis of “millions of connections made to cloud storage providers by users from CloudRail powered mobile apps” Dropbox and Box collectively accounted for roughly 57 percent of the users.

Here’s how that broke down:

  • Dropbox accounted for 47.3 percent of users
  • Google Drive accounted for 26.9 percent
  • OneDrive (Microsoft) accounted for 15.3 percent
  • Box accounted for 10.5 percent

However, when it comes to actual usage figures, Dropbox alone accounts for roughly 77 percent of the API calls made through CloudRail’s integration service.

VCs Back Capital Into Backups And Storage

This stiff competition has not stopped plenty of upstarts from entering the cloud data storage fray. And it seems like venture capitalists are eager to continue funding them.

Since 2014 there has been a consistent, year-over-year increase in the number of deals struck with US-based cloud data storage companies, and 2017 is on pace to out-perform the previous five years.

We’re Gonna Need A Bigger Server

The question, of course, is why? The fact of the matter is that the market is somewhat fragmented and, to complicate things further, the language we use to talk about the market is somewhat imprecise.

There are a number of market categories that get counted under the general umbrella of “cloud storage.” Yev Pusin, a spokesperson from Backblaze, a leading online backup and data storage service, noted that there are at least three market categories that often get called the same thing. There are:

  • File sharing and syncing services like Google Drive, Dropbox, Box, OneDrive, and others.
  • Cloud backup services like Backblaze Cloud Backup, Carbonite, Crashplan, and others.
  • What Pusin called “true cloud storage” services like Amazon S3, Google Cloud Storage, Microsoft Azure, and Backblaze’s own B2 service, among others.

The amount of data produced roughly doubles every two years, yet Pusin says the number of new consumer computing devices produced is not sufficient to keep up with that pace. This means that, increasingly, more and more of that data goes onto machines managed offsite by third parties.

Although the market for cloud storage, syncing, and backups is largely dominated by a handful of major players in each subcategory, there is still plenty of room for companies to address new areas in the market. And where there’s new and emerging niches to fill, there’s typically venture capital looking to fund it.