Would you pay 1,000% more for Box?

The Big Story

Box and none

When the fabled college basketball institution Indiana University received the proposed new terms for its unlimited storage contract with Box last December, Dan Calarco called time out.

Box was proposing a 1,000% price increase over the next three years according to Calaraco, chief of staff for IU's Office of Information Technology, who described his shock in a blog post earlier this month.

• "...we were put between a rock and a hard place: undertake a very disruptive move or pay a price that would likely make Box the most expensive single piece of software at IU," Calarco wrote.
• In an interview with Protocol, Calarco said the university had no choice but to start preparing immediately for a move away from Box's storage services, which students and faculty otherwise liked.
• Google and Microsoft, which had existing relationships with the university, were the beneficiaries of Indiana's decision to start moving university data out of Box and onto the other platforms before the existing contract expired in 2021, which is no small feat.

Tech companies have long valued educational customers, both as a way of supporting important institutions and introducing future customers to their products. But according to Calarco and several other university IT professionals, Box proposed similar pricing increases to several other institutions of higher learning on unlimited contracts.

• Box CEO Aaron Levie told Protocol that the company has around 1,700 educational customers, and last year proposed new pricing terms to "less than 3%" of those customers. The demand for unlimited storage among that 3% had become too expensive for Box to provide, he said.
• "We got some pretty helpful feedback from the community that the pricing [increases] didn't meet the mark," Levie said.
• Box was able to figure out a way to "renegotiate with our underlying infrastructure suppliers" and present new pricing terms to university customers earlier this year.
• But it was too late for Indiana: The university had already contracted with a data migration service and in any event, while the new pricing terms were more attractive they still introduced a cap on storage usage, Calarco said.

It's a little hard to understand what Box could have expected from customers presented with a 1,000% increase in the price of storage services.

• Box was a cloud file-storage pioneer when it arrived 15 years ago, but many of its capabilities are table stakes in 2020.
• Most companies and organizations have existing relationships with Microsoft and/or Google for office productivity software, and the cloud units of both companies — flush with cash — are happy to accommodate aggressive storage pricing terms for strategic customers like colleges and universities.
• And the pandemic has forced state colleges and universities to take an even closer look at their IT spending, given the budget hit that states across the country are expected to take thanks to the economic slowdown.

This is a pivotal year for Box, after it agreed in March to add three new board members controlled by activist investor Starboard Value. As of Tuesday, its stock is trading below the closing price the day of its 2015 IPO, and there are troubling signs of further challenges to come.

• A recent survey conducted by JP Morgan found that CIOs expect to decrease their spending with Box by 10% in 2020; only IBM ranked lower.
• And Calarco highlighted a more existential problem for Box, which is one of the biggest proponents of the "best of breed" philosophy of enterprise software that has carried the market for more than a decade.
• "In terms of [the] bigger picture, UITS has long pursued a best-in-breed approach to software," he wrote. "As we face increased cost pressures, UITS will focus more on platforms rather than products."

A MESSAGE FROM HPE

Organizations today are at a crossroads in their digital transformation efforts. According to IDC, 72% of applications remain outside of the public cloud.

HPE announced the launch of new cloud services from HPE GreenLake yesterday, which brings the speed and agility of cloud to your apps and data everywhere — to the edge, a colocation, or the data center.

This Week in Protocol

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Five Questions For...

CNCF General Manager Priyanka Sharma

What was your first tech job?

My first tech job was also my first full time job. I was hired as a [business development]/partnerships rep for AdSense at Google.

What's the best piece of advice you could give to someone starting their first tech job?

Don't always believe all the hype. One of the best professional experiences I had was at a company with a mediocre-at-best public reputation, but it was actually a nurturing and supportive environment. It often comes down to the specific people you work with in each case.

Mac or PC?

Mac, all day any day. I saw my first Mac when I arrived at Stanford on a scholarship from small town India. I had never seen one before and immediately fell in love. I've never looked back.

What was the biggest reason for the success of cloud computing over the past decade?

Power in the hands of developers. Amazon put compute in the hands of the creators and, lo and behold, our world has changed forever.

What will be the biggest challenge for cloud computing over the coming decade?

Cloud computing has become mission critical to our lives now because many key technologies rely on it. Greater reliability, offering innovation with new product offering, and at the same time fostering a startup ecosystem will be very important for the entire cloud computing landscape.

Around the Cloud

• Dell is once again mulling changes to its financially-engineered conglomerate, this time considering plans to sell off its entire VMware stake to pay down the massive debt on its balance sheet.
• Apple wasn't the only one with big Arm chip news this week: The new most-powerful supercomputer in the world was built by Fujitsu using Arm server processors.
• Confluent plucked a new chief financial officer from Google Cloud, as Steffan Tomlinson joins the data analysis startup ahead of an expected IPO.
• Meanwhile, Palo Alto Networks CFO Kathy Bonanno will leave the security company to take a prominent finance role at Google Cloud.
• Where does Slack go from here? Deciding which workplace collaboration tool is right for your company might be as much a function of its corporate culture as anything.
• HPE CEO Antonio Neri was recently diagnosed with COVID-19, but forged ahead with the company's virtual event this week and introduced new platform software designed to help legacy customers embrace containers and Kubernetes.
• Tim Bray was last seen rage-quitting AWS amid its response to the pandemic in its warehouses. Now he's put together a thoughtful and very Amazonian document proposal to spin AWS off from its parent company.
• Cloud giants AWS and Microsoft got a lot of credit for announcing that they would stop providing facial recognition services to police agencies, but Bloomberg pointed out that the new stance is more complicated than it might appear.
• A pre-pandemic survey of IT leaders found that 25% were planning to go all-in on the cloud over the next year, and it's likely that number has gone up since March.
• Tepid financial results among cloud providers might be due to strategic decisions to give prominent customers a temporary break on their bills, and should be viewed accordingly.

A MESSAGE FROM HPE

Tune in to the latest announcements in Cloud, AI, and Edge from HPE Discover Virtual Experience. Watch HPE President and CEO Antonio Neri's keynote, and don't miss hundreds of sessions, transformation stories, demos, and trainings live and on demand. Tune in on demand for FREE.