The move happened back in October, but was only announced to the public today: After eight years of hosting its service in Amazon's cloud, Dropbox is taking its marbles, or at least its data, and going home. Ironically, Dropbox has chosen to go public with this change the month after Netflix, another wildly successful cloud-based company, announced it was making the exact opposite move--shutting down its own servers and moving much of its data to Amazon's cloud.
Strangely enough, both moves make perfect sense. Netflix chose to start moving to Amazon Web Services after a major database failure stopped it from mailing DVDs to its customers for three days. (Although, ironically, it appears to be keeping its DVD business on its own servers.) Netflix is primarily an entertainment company which now creates its own content as well, such as the wildly popular "House of Cards." Moving to the cloud helped improve Netflix's availability to four nines, according to the company's blog. In English, this means that people seeking to stream Netflix content get it 99.99 percent of the time, if you don't count external factors such as Internet or electricity outages.
Storage vs. storage
Dropbox, on the other hand, is a cloud-based storage company that half a billion people (including me) depend on to keep their data safe and secure, and reachable from anywhere. That makes it a cloud-based storage company, which in many ways is what Amazon is too. Dropbox has assured customers that it is still hosting a portion of its storage in Amazon's cloud and that the two companies will remain close partners. (Amazon, as usual, isn't saying anything to the media.)
When Dropbox started out, it was close to alone in its market. That's changed big-time, with behemoths Google and Microsoft--and Amazon--also offering cloud-based storage to consumers and startup Box nipping at Dropbox's heels. Controlling the reliability and cost of hosting its data will become mission-critical for Dropbox if it isn't already. And the most logical way to do that is by controlling the servers themselves that the data lives on.
Then there's the sheer volume of data involved. Netflix movies take up somewhere around 3 petabytes of storage. (To wrap your head around the enormousness of a petabyte consider that one is enough to hold 2,000 years worth of digital music.) That's a heckuva lot of data. But Dropbox says it has 500 petabytes of data, more than 100 times as much as Netflix does. At that kind of scale, the conventional wisdom that hosting data in the cloud is more efficient, more secure, and less costly goes right out the window.
There's one possible danger for Dropbox though: By building its own cloud-based storage, the company is betting big on its future. Analysts may not feel the same, with some arguing that the company's $10 billion valuation is way too high. By creating its own datacenters, Dropbox shows it is planning on a future where its storage needs stay high and continue to grow. Otherwise, it could wind up with a whole lot of servers it doesn't need.
That's what happened to Zynga, maker of the wildly popular Farmville. Remember that? Zynga, too, moved away from Amazon's cloud and spent $100 million to build its own data centers. Then things stopped going so well. Last May it announced it was moving back to Amazon.