Box Private Vendor Watchlist Profile: Cloud - Based Content Collaboration Services Enabling Enterprises to Move Tow ard Next - Generation Collaboration http://goo.gl/wGCvr

1. VENDOR PROFILE
Box Private Vendor Watchlist Profile: Cloud-Based
Content Collaboration Services Enabling Enterprises
to Move Toward Next-Generation Collaboration
Laura DuBois Ryan Patterson
Bharath Regula
IDC OPINION
www.idc.com
Box is a cloud-based content management and collaboration service provider that
enables businesses to securely share, manage, and access content online across
multiple devices such as PCs, tablets, and smartphones. The company,
headquartered in Palo Alto, California, has over 7 million users and is growing quickly
F.508.935.4015
in the file synchronization and collaboration market. Box provides a simple, easy-to-
use interface to manage content online, focusing on common business needs such as
file share, content-centric collaboration, and secured access to data with detailed
reporting. Box's partnerships with various enterprise systems and content
management providers as well as supportability on all major platforms makes Box an
P.508.872.8200
attractive option for enterprise and small and medium-sized businesses to meet next-
generation collaboration and file management needs. We believe Box is a company
to watch because of the company's:
 Fast-growing customer base with focus on business professionals and meeting
Global Headquarters: 5 Speen Street Framingham, MA 01701 USA
the enterprise requirements for security and scale
 Extensive content management features that eliminate the necessity of multiple
IT tools, simplifying the job of IT administrators in providing the support
 Participation in several market categories where public cloud services are
disrupting traditional on-premise offerings from file management (e.g., managed
file transfers and FTPs) and storage to content and collaborative applications
 Growing partnership ecosystem bringing Box's cloud capabilities to many
commonly used enterprise applications such as salesforce.com, NetSuite, Jive,
Yammer, Google Apps, and SharePoint
IN THIS VENDOR PROFILE
This IDC Vendor Profile analyzes Box, a company playing in the public cloud
advanced storage services market and the content management and collaboration
market, and reviews key success factors: market potential, technology/solution,
corporate strategy, force multipliers, and customers. Leveraging IDC's expert
understanding of the competitive landscape and future outlook, this document
highlights company and market information tailored to the investment professional's
needs.
Filing Information: October 2011, IDC #230624
Private Vendor Watch Service: Vendor Profile

2. SITUATION OVERVIEW
Company Overview
Box, based in Palo Alto, California, was founded in 2005 based upon a simple idea to
securely access, share, and manage content easily across multiple devices. The
company has now reached over 7 million registered users serving consumers, small
and medium-sized businesses, and enterprise companies. With 100,000 business
customers, Box is one of the popular content management solution providers for
companies looking for lightweight content management and collaboration. The
company competes in the public cloud advanced storage services market as well as
content and collaborative applications market.
Company details are provided in Table 1.
TABLE 1
Box Company Snapshot
Category Details
Functional and secondary markets  Public cloud advanced storage services
 Content and collaborative applications
Founding year 2005
Number of employees Approximately 300
Number of customers Over 7 million
Company location Palo Alto, California
Web site www.box.net or www.box.com
Funding initiatives Not currently seeking
Investors Salesforce.com, SAP Ventures, Bessemer Venture Partners, NEA,
Meritech Capital Partners, Andreessen Horowitz, Emergence Capital
Partners, Draper Fisher Jurvetson, U.S. Venture Partners
Sales channels Both direct and indirect
Revenue estimate Box does not disclose, but IDC estimates annual revenue of under
$50 million
Source: IDC, 2011
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3. IDC Watch Factor Scores
IDC Watch Factor scores measure private companies based on a set of five defined
success factors. Each of the five key success factors is made up of detailed
subquestions, which are assigned a value from 1 (weak) to 4 (strong). The average of
the subcategories is then applied as the overall score for each category:
 Market potential: Market growth potential, strength of competition, and current
stage of market (early adopters versus late majority)
 Technology/solution: Level of differentiation, disruptive capability, and
scalability
 Corporate strategy: Go-to-market strategy, management pedigree, and
financial status (running on venture capital with insignificant revenue versus self-
sustaining and not seeking additional rounds of funding)
 Force multipliers: Current partnerships/certifications, additional partnerships
likely within the next two years, and channel/sales strategy
 Customers: Number of existing customers, quality of existing customer base,
geographic reach, and size of addressable market in the coming years given the
vendor's current capabilities
Figure 1 shows the Watch Factor scores for Box versus the Watch Factor average
scores for all companies ranked by the Private Vendor Watch Service in the
applicable market at the time of publication. The sections that follow detail the
reasons for those scores.
©2011 IDC #230624 3

4. FIGURE 1
Box Watch Factor Score Versus Watch Factor Average Score
Notes:
The Watch Factor average score reflects the average score for all private companies scored by
the Private Vendor Watch Service at the time of publication.
Scores are based on a scale of 1 to 4, where 1 = weak and 4 = strong.
Source: IDC, 2011
Market Potential
Market
Box competes in the public cloud advanced storage services market segment and
specifically the file sharing, file synchronization, and backup services segment, which
IDC has sized to be a $724 million market in 2009. IDC expects the segment to grow
to $2.5 billion by 2014, representing a 28.2% CAGR. This market is still in an early
and nascent state and is predominantly being capitalized on by small innovative start-
ups. The company does not disclose revenue, but IDC estimates Box has an annual
run rate of under $50 million in revenue.
By providing simple to use yet secure cloud content and collaboration services, Box
also disrupts the established markets in the content and collaborative applications
market segment. IDC has sized this segment to be about $30.3 billion in 2009,
growing to $41.5 billion by 2014. Box's easy-to-use file management and
collaboration solutions fit the needs of enterprises that are looking for a lightweight
solution that is quick to deploy and brings faster time to value.
Box is growing on an average of 200–300% per year and has seen a 75% increase in
average deal size within the last year. The enterprise business segment has been
one of the fastest-growing segments for Box. IDC estimates 80% of Box's revenue is
derived from business customers while 20% of revenue is derived from consumers.
Box's solutions are well positioned for both consumers and business segments that
are looking for innovative and easy-to-use file management solutions.
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5. Market Disruption
Advanced public cloud storage services (e.g., backup, file sharing, file synchronization,
and archiving and replication services) are all cannibalizing or impacting traditional
storage software license sales. IDC research suggests firms will continue to shift
spending to public and private cloud offerings over the next five years.
Box's cloud-based file management solution consolidates various business needs
such as file sharing, next-generation collaboration, and enterprise mobility, bringing in
a comprehensive solution that is highly disruptive to adjacent markets in content and
collaboration. Box's easy-to-use interface, wide variety of content management
features, and partnership with various enterprise applications make it a unique
product that is particularly attractive to enterprise business as well as consumers and
small and medium-sized businesses.
Competitive Landscape
Box competes with various companies depending upon the use case it is serving.
Two of the biggest use cases for Box are file sharing and next-generation
collaboration. While Dropbox, Egnyte, Syncplicity, and MobileMe compete with Box in
file sharing and mobility space for consumers, on-premise solutions such as
SharePoint compete with Box for advanced collaboration services. Presently Dropbox
owns the largest mindshare in the market as a popular consumer choice for file
management. Potential development and offerings by EMC Mozy and Symantec
would shake up this market.
M&A
This market space is still very nascent, and there has not been any material M&A
activity in the core market although adjacent markets of SaaS-based backup and
collaboration have seen M&A activity. However, traditional technology suppliers are
likely to make, build, or buy decisions that could drive future M&A activity, in
particular, those with material user adoption.
Table 2 displays recent M&A deals in the SaaS market.
TABLE 2
SaaS M&A Deals
Date Acquirer Target Company Deal Value ($M) Specific Market/Solution Type
September 2007 EMC Mozy 76 SaaS backup
May 2011 Limelight Networks Clickability Unknown SaaS Web content management
April 2010 Salesforce.com Jigsaw 142 SaaS sales
May 2010 SuccessFactors CubeTree 20–30 SaaS collaboration
Source: IDC, 2011
©2011 IDC #230624 5

6. Technology/Solution
Box is a cloud-based content management and collaboration platform that offers a
simple, easy-to-use interface for its users to securely share, access, and manage
data across multiple devices. Its key services include content management services,
collaboration and sharing services, enterprise mobility, and secure deal rooms.
Box's cloud-based content sharing services eliminate the need to use different file
sharing solutions that a company typically employs, such as FTP, NFS, or MFT. To
enable users that prefer to work on the files directly on the desktop, Box provides a
desktop client that automatically synchronizes the content in the cloud. Content placed
in Box is encrypted and indexed for full-text search. Other important features
surrounding content management include full library services, including version control
(check in/out) and controlled access (document-level and folder-level security).
Collaboration in conjunction with file sharing has become very important to the current
generation workforce. Box provides a content platform that is rich in collaborative
features. Its robust content preview technology allows users to preview all types of
documents and rich media files directly in the browser. Users can discuss, comment,
and see activities, creating a social experience. For more secure and confidential
collaboration, Box provides secure workspaces that facilitate confidential deals such
as mergers and acquisitions, client engagements, and other highly secure document-
centric transactions.
Today's workforce is increasingly mobile. Sales forces and field workers are
increasingly finding the need for mobility, as are users in the regular workforce who
prefer to have access to the data and work on it from anywhere. Box's solution is
supported in more than 10 mobile platforms and works on different devices such as
tablets, laptops, and smartphones. To provide a rich user experience, Box built its
mobile applications using the native API of the platform. Box is integrated with over
150 enterprise applications, extending the value of those applications by providing
mobile access and sharing features. Some of the prominent enterprise applications
that Box has partnered with are: salesforce.com, NetSuite, Jive, Yammer, VMware,
Ping, Okta, MS Office, EMC Documentum, IBM FileNet, and MS SharePoint.
Box provides comprehensive administrative capabilities and strong security features
to securely manage activities. Box's administrative console allows an administrator at
the customer organization to manage users, monitor activities, and customize and set
security policies for the account. Security is one of the biggest concerns in using
cloud services. Box addresses those concerns by facilitating secure file transfer,
using 256-bit SSL encryption. Box's cloud data is managed in two different colocation
datacenters where the servers used are managed and owned by Box.
Customers using Box are charged based upon the subscription plan they subscribe
to. A free subscription is available for anyone with 5GB of storage and basic file
sharing capabilities. The free subscription is mainly targeted toward consumers for
promotion of the Box solution. The business and enterprise subscription plans unlock
the full potential of Box's capabilities and cost $15 per month and $25–35 per month,
respectively, depending on needs and volume.
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7. Corporate Strategy
Leadership
Box's cofounders, CEO Aaron Levie and CFO Dylan Smith, transformed Box from a
college project to a successful online collaborative platform.
Dan Levin, the chief operating officer, came to Box from Intuit where he was
responsible for QuickBooks-branded small business products and services. Prior to
Intuit, he spent nine years as a senior executive leading various venture-backed start-
ups.
Enterprise General Manager, Whitney Tidmarsh Bouck, and Jen Grant, vice president
of marketing, bring marketing and sales experience from large-scale enterprise
companies. Bouck and Grant help Box to promote its products to enterprise and small
and medium-sized businesses.
Jon Herstein, head of customer success, recently joined Box from NetSuite, and
Chris Yeh joined as a vice president of Box platform. Yeh most recently ran the
Yahoo! Developer Network.
Overall, Box has well-rounded leadership experience to drive the company toward its
goal to become a leader in the cloud-based content and collaboration platform and
the advanced storage market.
Go-to-Market Strategy
Box has a three-pronged strategy to attract consumers, small and medium-sized
businesses, and enterprise businesses. The company provides free subscription for
5GB of storage mainly targeted toward consumers and relies strongly on viral
marketing and word-of-mouth communication to attract more consumers. To reach
various medium-sized companies, Box is partnering with various value-added
resellers. Box launched its new Certified Reseller and Solution Providers programs
with over 30 new partners including Appirio, WEB'R, Board Tools, HEDLOC, and
PCMall. In addition, Box has developed a number of technology partnerships with
vendors including Citrix, DocuSign, EMC Documentum, Google, HP, Intuit, Jive,
MobileIron, NetSuite, Ping Identity, RIM, salesforce.com, Samsung, SugarCRM,
VMware, Yammer, and Zoho. Box Apps Marketplace currently has 150+ applications
that are integrated with Box including Google Apps and Google Docs, DocuSign,
Quickoffice Connect, LinkedIn, AutoCAD, FedEx, DocsInOffice.com, and Tagle. Box
is heavily investing in increasing its sales team to directly reach to enterprise
businesses.
Exit Strategy
Box is executing its strategy well but needs to continue to demonstrate revenue and
customer traction as it penetrates the enterprise software market. The company is
focused on promoting its solution as offering more advanced storage services than
mere cloud storage such as file sharing, collaboration, and data protection.
©2011 IDC #230624 7

8. Key Acquisitions
Box has not made any acquisitions.
Current Investors
Box is not currently seeking funding.
Table 3 displays a detailed funding history for Box.
TABLE 3
Box Detailed Funding History
Round Date Amount ($M) Investors
A October 2006 1.5 Draper Fisher Jurvetson
B January 2008 6 U.S. Venture Partners, Draper Fisher Jurvetson
C April 2010 15 Scale Venture Partners, Draper Fisher Jurvetson, U.S. Venture Partners
D February 2011 48 Meritech Capital Partners, Andreessen Horowitz, Emergence Capital
Partners, Hercules Technology Growth Capital
D October 2011 81 Bessemer Venture Partners, NEA, Andreessen Horowitz, and Draper
Fisher Jurvetson, along with strategic investors salesforce.com and SAP
Ventures
Source: IDC, 2011
Force Multipliers
Partners
Box has partnered with various technology providers to integrate its product with
various enterprise applications, extending their value. Box is integrated with over 150
enterprise applications, with key applications including: salesforce.com, Microsoft
Office and Outlook, Google Apps, Google Docs, DocuSign, Quickoffice Connect,
LinkedIn, AutoCAD, FedEx, DocsInOffice.com, NetSuite, EMC Documentum,
Microsoft SharePoint, IBM FileNet, Live Office, Jive, Yammer, Apple, Samsung, HP,
Orange, Motorola, MobileIron, Good Technology, and RIM. These partnerships
enable Box to reach the large, small, and medium-sized businesses and gain
popularity among enterprise businesses. Furthermore, Box has developed channel
partnership with various resellers such as WEB'R, Board Tools, PCMall, and
HEDLOC.
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9. Box secured its largest deal with Procter & Gamble (P&G) where Box deployed
20,000 licenses. Box is looking to develop similar partnerships in the enterprise
space.
Partnership Opportunities
Box could partner with OEMs for desktops, PCs, and servers that are shipped directly
to businesses and consumers. Having Box software preinstalled in those machines
would encourage user trials, which would promote fast adoption of Box services. At
BoxWorks, Box's customer conference in late September 2011, the company
announced a strategic partnership with HP for Box to be preinstalled in HP's SMB-
targeted PC laptops and with Motorola for preloading Box for Xoom tablets.
Channel/Sales Strategy
Box's solutions are designed for consumers, SMBs, and enterprises. Box is reaching
the consumer market directly through its Web site and relies strongly on word-of-
mouth communication, viral marketing, and direct promotional activities. The
company is increasing its direct sales force to attain a strong growth in the enterprise
market. Box launched its new Certified Reseller and Solution Providers programs with
over 30 new partners to reach the large number of SMBs in the market.
Box does not disclose its sales mix, but IDC estimates it is 90% direct sales and 10%
indirect sales.
Customers
Key Customers
60% of the Box Web traffic and 85% of the revenue come from the U.S. market. As of
the end of September 2011, Box had 7 million registered users and 100,000
businesses actively using the service. Box signed its biggest deal with Procter &
Gamble where 20,000 Box licenses are available to the global workforce of P&G.
Some of the key customers for Box are:
 Procter & Gamble
 Dell
 McAfee
 Clear Channel
 Six Flags
 TaylorMade
 Pandora
 Balfour Beatty
©2011 IDC #230624 9

10. Key Audiences
Box markets its solutions to consumers, SMBs, and enterprise businesses. However,
Box is betting its future on increasing the footprint in the enterprise market. Box's
solution is applicable to many different businesses but has strong traction in key
vertical markets with a heavy mobile workforce, commitment to cloud computing,
high-collaboration needs, and/or engagement with outside parties.
The strongest performing verticals for Box include:
 High technology
 Retail
 Manufacturing
 Engineering and construction
 Financial services
 Professional services
 Life sciences
 Consumer packaged goods
 Media and entertainment
Geographic Reach
Box is currently predominantly selling its services in North America, although a large
percentage of its users are outside of this region. 40% of Box application Web traffic
comes from outside the United States, contributing to 15% of total revenue. Box plans
to increase its international presence and is expected to expand into Europe in 2012.
The company has also made a recent partnership with a reseller in Australia to enter
the Australian market.
FUTURE OUTLOOK
Challenges and Opportunities
Challenges
Box is still growing and developing its operational capabilities. To attract enterprise
business and maintain it successfully, Box needs to demonstrate its capabilities in
performing large-scale deployments and providing customer support.
Box competes in multiple areas such as file synchronization, collaboration, and file
sharing. Box is therefore competing with companies that have sole focus in those
markets. To remain competitive, Box has to ensure it continuously brings leading-
edge innovation to its products.
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11. Brand leaders in security, storage, and information management like Symantec,
EMC, and Autonomy have shown interest in participating in the market. Should these
suppliers develop or acquire technology that is an alternative to Box, the company will
be left in a defensive position. Thus, to avoid getting edged out by larger players, it is
critical that Box develops more strategic partnerships with some of the larger software
companies that are attempting to enter or have already entered the cloud storage or
SaaS storage markets.
Opportunities
Box has the opportunity to OEM or license its technology to service providers, SaaS
providers, and ISVs alike. In many ways, the functions Box is offering are an
extension to on-premise file storage, security, and information management offerings.
Hence partnerships and investment in the platform to make it easier to build custom
applications leveraging core Box content management and collaboration capabilities
make sense. Box could continue to grow its partnerships with various other
technology providers, strengthening its partner ecosystem and maturing the Box
platform to realize its vision to be the de facto storage, content management, and
collaboration platform for business professionals.
ESSENTIAL GUIDANCE
Reason to Watch
Box's extensive feature set surrounding collaboration and file sharing with
administrative control makes Box an attractive product for enterprises. The company
has partnered with many technology vendors to extend the value of over 150
enterprise applications, enabling Box to easily demonstrate its product capabilities.
Box is tied into two IT megatrends — mobility and cloud. Box is an early participant in
the emerging opportunity for connecting mobile users and a growing universe of
smart devices with centralized IT services, data access, and cloud storage services.
Increasingly, mobile devices are being brought into the corporate workplace for
increased user productivity. This introduces a challenge for IT organizations that must
provide centralized IT controls over the devices and how users access data stored in
the cloud.
Differentiators
Box is differentiated in the market by the following:
 Ability to access data anywhere from any device including mobile, tablet, and PC
with an easy-to-use interface
 Robust content preview technology that allows users to preview all types of
documents and rich media files directly in the browser
 Open API that enables easy integration of Box's capabilities with enterprise
applications
©2011 IDC #230624 11

12.  Extensive administrative capabilities to manage users, monitor activities, and
customize and set security policies for user accounts to ensure auditability and
compliance
Advice for IT Managers and End Users
Enterprises that are consolidating disparate file servers and modernizing technologies
for file sharing, collaboration, and synchronization would be well served to evaluate
solutions like Box. The Box solution enables online backup, data protection, and file
sync services in a way on-premise solutions do not. This solution also eliminates the
need for file servers, SharePoint, VPN services, on-premise storage, and so forth.
However, when evaluating any public cloud storage service, firms should vet the
supplier's data privacy, security, and SLA terms. With recent publicly known security
attacks and unplanned downtime events, firms must place the highest levels of
scrutiny on public cloud services to ensure these solutions are not introducing
unnecessary risk to their organizations.
LEARN MORE
Related Research
 U.S. Public IT Cloud Services by Industry Sector: More Details on the
Opportunity (IDC #226222, December 2010)
 Cloud Storage Impacted by Datacenter Transformations and the Changing Role
of IT (IDC #226214, December 2010)
 Public Cloud Business Continuity Services Remain an Underserved Opportunity
(IDC #224792, September 2010)
 Adoption and Spending Intentions on Public Cloud Backup Services (IDC
#224265, August 2010)
 Storage in the Cloud: Overview of Key Players and Service Offerings (IDC
#224244, July 2010)
 Worldwide Storage in the Cloud 2010–2014 Forecast: Growth in Public Cloud
Storage Services Continues as Firms Decapitalize IT (IDC #223396, June 2010)
 IDC's Worldwide Storage and the Cloud Taxonomy, 2009: Assessing the
Opportunity from All Angles (IDC #221293, December 2009)
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©2011 IDC #230624 13