Saturday, January 4, 2014

SugarSync Is No Longer Quite So Sweet

Over the last few years, I've spent more time following business issues in the IT industry than I had when I was younger. Perhaps it's just another mark of getting older.

Over the holidays, a news item caught my eye: SugarSync has stopped giving away free storage.

It's the hallmark of any new technology or developing area of business:

  • Someone comes up with something new. 
  • Many other players pile into the new space.
  • Some time passes
  • Players that can't make money (or generate the growth numbers they want) leave the new field and the space consolidates.
  • The consolidation can go down to just a few companies. Those companies do not always include the one that created the space.

We have seen this with cars (in the first part of the 20th century, there were hundreds of small manufacturers in the US alone. now there are only two behemoths that are headquartered here and a few dozen firms based overseas). Other technologies (radio, television, ISPs, RDBMs, hard drives, and personal computers to name a few) and business areas (department stores, malls, convenience stores, hardware stores) have gone through the same evolution.

In the case of consumer-oriented, internet-based, replicated storage, I believe that DropBox was first and SugarSync followed. (I'm ignoring things like rcp, unison and such. Even though they have been available for decades in some cases, they never caught on past the sysadmin or power *nix user crowd.) With SugarSync changing it's business model, I can't help but wonder if we are seeing more evidence in "the internet" turning away from the free-for-all model (so to speak) to the same old charge-'em-at-the-door model that we've seen for generations. Periods of consolidation can presage increased profitability for the survivors.

A few years ago, I was an avid SugarSync user. I used their Windows and Android clients. I chose SugarSync over DropBox, Box, Skydrive and Mesh because SugarSync had an Android client and a the most liberal policy with respect to free space. IOW, they gave away more GB than their competitors.

At some point, the Android client stopped syncing my photos properly. At that time, both Google Drive and Microsoft Skydrive became viable alternatives. I need Google and Microsoft for other reasons, so SugarSync was the odd man out. I retired my SugarSync clients.

With industry heavyweights giving away storage space, SugarSync has a hard row to hoe. Microsoft and Google can afford to give away space, as a sort of loss leader. In the long run, I think that the online editing provided by Microsoft and Google will become increasing attractive to users. DropBox has name recognition and is widely supported by popular apps. Box has the enterprise orientation that DropBox doesn't (at least not yet). I could see a larger company buying up DropBox or Box. I am not sure where SugarSync fits into the market, five years down the road.

I would say that the best path for any of these small firms would be an acquisition by a larger player that already provides some sort of SaaS and supports multiple platforms. This leaves Apple and Microsoft out, but a consumer-focused organisation like Yahoo might do nicely. Amazon might find it easy to integrate SugarSync into their S3 storage offering and it might be worth something to them if the costs are right.