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Dropbox Case Study

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Issue: Dropbox faced three major issues in 2013 related to future profitability: customer growth in B2C and B2B markets, free-to-pay user conversion, and competitive threats. Describe how each of these issues came about and why they are critical for Dropbox going forward. Do you see any other major issues? * When Dropbox first launched in 2007 the cloud storage market was already flooded with smaller competitors. Getting business customers was tough due to bureaucratic delays in getting them to integrate the services into their operations. It was also hard to get customers to pay because mainstream consumers weren’t yet used to using cloud-storage services.
Analysis: What information in the case can help you formulate a strategy to address the issues above? 1. How effective was the 2010 consumer acquisition strategy? Calculate the cost of the referral campaign and the increase in annual revenue. Assume a 12% install rate (p. 3), a 1.6% free-to-pay conversion rate (p. 4), a $1.32 cost per free user (p. 4), and $120 revenue per paying user (p. 3). Do not worry about the free additional space that accompanies referrals. * The 2010 consumer acquisition strategy, over the course of 5 years, led to Dropbox holding a large share of the consumer cloud storage market. Their conversion rate went from 1.6% to 4.0%, which translates to $200-240 million in yearly revenue. After calculating the cost of the referral campaign and the increase in annual revenue, it came out to be a difference of $201,600. 2. Conduct a SWOT analysis for Dropbox in 2013. * S – conversion rate 1.6 to 4.0 translating to $200-240 million in yearly revenue. Platform agnostic. * W – single product revenue. Smaller in terms of their competition. * O – Can grow B2B. Brand partnerships and expand offering. * T – Price competition and security. 3. How

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