When Apple shipped its iMac without a floppy drive, some consumers cried foul, but one entrepreneur saw opportunity for a
file storage business on the Web.
That Web site, iMacFloppy.com,
launched in October and sold as the two-employee, platform-independent NetFloppy.com in May to Xoom.com for $1.65 million.
"I saw a huge need because of the lack of a floppy," said company founder
Frank Borges LLosa. "Steve Jobs decided to make a computer without the floppy drive with the thought that the floppy was obsolete. But he stopped one stop short by not explaining how we do without it."
NetFloppy.com is just one small player in an emerging niche of Web-based
file storage companies betting that users will want to do with their files
what they are already doing by the tens of millions with their email,
calendar, and other traditionally desktop-based applications: put them on
the Web where they can be accessed from any networked computer.
The migration of applications from the desktop to the Web has been one of the past
year's defining trends.
"The idea that we're going to go into the 21st century
hauling our most valuable documents and information around in plastic boxes
is crazy," said Spencer Reiss, analyst with the GilderGroup. "The proper
place for important data is in a mountain somewhere with guys in white
coats taking care of it."
The new crowd of document storage Web sites may not be storing documents in
subterranean mountain laboratories; but Reiss and others argue that files
are safer with a reputable Web site than on a laptop computer prone to
theft or damage.
For potential Web-based file storage users concerned about
privacy, Reiss speculates that some providers may wind up offering value-added services such as encryption.
Across the board, the file storage sites are mimicking the free email sites
in their revenue models: attract a large population of users with a useful
free service and then sell advertising, sponsorships, and value-added
services like security or extra space. Most providers offer between 15MB and 20MB of storage free.
While document storage on the Web has yet to earn the popularity of other
Web-based applications, backers point to the success of email and
calendaring as evidence that the trend will flourish.
One file storage Web site hopes to follow in Web email's footsteps through
the phenomenon of viral marketing, in which one user passively evangelizes
the product and brings in other subscribers just by using it. My Docs Online points to its
file-sharing feature as the key to its future growth.
"On average, a self-registered user of My Docs gives out four files, and
three of those people are registering with the service," said company
spokesperson Carol Smykowski. The site has more than 40,000 users in more
than 40 countries since launching in March, Smykowski said.
My Docs also has a patented technology that lets a subscriber track how
many times a file is transferred and whether it is deleted, though it
does not identify to whom it is sent.
Another firm offering file storage is Visto, which also offers email, calendars,
and other utilities.
Both Visto and My Docs are pursuing partnerships with other firms on the
Web. Visto's service is available through Compaq.com, Network Associates' McAfee.com site, and Microsoft's Office Update Web site.
Microsoft's relationship with firms offering document storage and other
applications on the Web is tricky. On the one hand, Microsoft partners with
Visto to provide tools for storing Office documents on the Web. On the
other hand, a wholesale defection from desktop applications to Web sites could threaten
the growth of Microsoft's desktop software sales and even the importance of
its operating system.
Microsoft executives were not immediately available to discuss the
company's strategy for Web-based applications in general or file storage
solutions in particular. But the company has argued that Web-based
applications and traditional desktop applications go hand in hand.
Meanwhile, the company has been buying up Web firms including Hotmail and
Jump Networks, which offers a calendar and other applications.
Prior to its acquisition of Jump Networks, Microsoft chief executive Bill
Gates said the company planned to expand Hotmail
to include a number of so-called productivity tools, including storage of
text files. Gates said Microsoft's entry into this area would be
"aggressive." Hotmail today said there was nothing new to report regarding
file storage.
Visto would not say whether its discussions with Microsoft had touched on the
topic of acquisition. My Docs said it was not currently in discussions with
Microsoft for any kind of partnership, but that it planned to integrate its
product more closely with Office 2000 soon.
In a related matter, Visto this week announced its second round of funding. The firm raised $24 million "to continue expansion and branding." Investors include
lead investor GE Investments, prior investor CMG @Ventures, and Attractor.
Visto has raised $38.1 million since starting up in 1996.
Other Web sites offering free file storage include FreeDrive and Freediskspace.com, which offers 50MB of storage.
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