The Conundrum of Chinese Cloud Storage Startups
Along with the hype of cloud computing, free online storage also grabbed people’s attention as the likes of Dropbox (turned down Apple’s olive branch) and Box.net (reportedly planning an IPO) gained popularity among users. The past few years witnessed more and more new entries into the market with mixed results on both sides of the Atlantic.
Besieged by Giants
The phenomenal prevalence also brought Chinese Internet conglomerates’ attention to the field. Companies like Baidu, Huawei, Tencent, Qihoo 360 and so forth also set both eyes and feet onto the market, which makes life even harder for existing startups engaged in the same business and leaves them in a situation of losing users and business and desperately finding a way out.
Liang Tianzhu from RayFile, one of the Dropbox wannabes in China, mentioned the word “barely survive” several times in an interview with local media. RayFile launched its service back in 2007 and was well received among Chinese netizens. People can use the service to upload and share contents; some are illegal ones that might involve copyright infringement. But it did bring enormous traffic and advertisement sales to RayFile. However, good days as always come to an end. Rayfile saw its traffic declining rapidly since the giants also ventured into the market. For example, Rayfile’s traffic was on a sharp drop of 20% only two days after Baidu launching its similar cloud storage offering in September.
What’s worse, many employees left Rayfile with only 4 now remained in the business, including Mr. Liang himself.
Rayfile’s sad story exemplified the common experience of other cloud storage startups.
Waiting for the turnaround
Mr. Liang thought that there would be an end for Baidu, Huawei, Thunder to burn money, and RayFile planned to maintain the current resource and market, and wait for future opportunities.
Likewise for other startups which also planned to maintain their service at minimum cost to wait for a turnaround.
However, there still are some optimists who took the severe competition as an opportunity to shuffle the market towards a better direction. Lai Linfeng, founder and CEO of 115.com has faith in the idea that there must be a way out via cloud storage-based innovation or by focusing on niche market. His company aims to create a SNS/mobile-infused cloud storage product. Wish him luck.
Not sure how would Mr. Lai’s plan pan out down the road, but at least he’s rising to the challenge and fighting back, which might be a better solution than just sit tight and wait for the giants to pull back from their greediness.