Word emerged today that Dropbox has acquired CloudOn, a mobile productivity vendor based in Israel. CloudOn produced a Microsoft Word compatible editor for mobile devices and browsers. There are two ways to look at this move.
It makes sense for Dropbox, as editing is functionality that their users are looking for. Having it would help them compete against Google and Microsoft and other EFSS players which have built in editing features.
But it is also odd, considering the deal that Dropbox did for integration with Microsoft recently. One of the reasons Microsoft did that integration deal was that Dropbox is less of a threat to them because they don’t have content creation tools – unlike Google which is a threat to both. They united to combat a common enemy. This acquisition potentially puts Dropbox on a track to compete with Microsoft more than they have in the past.
I doubt that is where Dropbox is going, however. It is not really in Dropbox’s interest to go head on against Microsoft with CloudOn now that they have made nice with each other. They would probably not have shut down CloudOn so quickly if this is the way they were going. The service will disappear in less than two months. Why drive customers away if that is the direction you want to go?
I think this is more of a skills acquisition play. CloudOn started out offering a virtualized Microsoft Word on devices, but has been moving away from that to make a Word compatible editor. They have skills about how to build editing tools and compatibility with Microsoft. Dropbox can use those, not necessarily to make a Microsoft Word clone; that would be boring. It would be far more interesting to build something really new, or add lightweight editing to things like Inbox, or speed up its Harmony project to add collaborative features while editing Microsoft documents in Office or add features to the various Dropbox mobile clients. I don’t have inside information, but this sounds much more likely to me. I’m curious to see how this will play out and where they will go with it.
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