news The nation’s largest telco Telstra has added to a recent splurge of funding on smaller companies, ploughing a reported $10 million into US-based corporate cloud file-sharing company and Dropbox competitor Box.
Box is an online file sharing and content managent company. The company’s fundamental business model and method of operation is not unlike better-known US file sytorage company Dropbox, but it focuses on the business market instead of Dropbox’s broader total market. The company has previously taken a number of angel and venture capital funding rounds reaching above $150 million. The company said last week that it would raise a new funding round of about $100 million, of which Telstra’s contribution is a reported $10 million, according to several media outlets.
In a statement, Telstra said it would enter into a commercial agreement Box to offer its secure file-sharing and collaboration solutions for the Australian business, enterprise and government market.
Telstra Ventures Managing Director, Mark Sherman, said the agreement with Box would enhance Telstra’s growing cloud business and to drive more value from our core network.
“Box offers a world leading collaboration capability for file-sharing and synchronisation services,” Sherman said. “Customers are harnessing the power of cloud, social and mobility in their desire to increasingly collaborate not only within their own business, but also with vendors, business partners, investors and other 3rd party providers. In the past, the challenge was maintaining control of file access and user privileges through the collaboration process. ”
“With Box, we will have the tools to overcome those issues. Additionally, using Box on Telstra’s mobile network means customers can enjoy a faster and more reliable experience when accessing and collaborating with files on smart phones and tablets.”
“We know the traditional workspace and customer collaboration are undergoing a huge shift. They are moving from simple to complex, desktop to mobile, employees to partners and suppliers, so access to your files on the go is now becoming more and more important in the business world. Therefore solely using traditional inside-the-firewall platforms is becoming an outdated practice and customers are looking for secure cloud based solutions like Box”.
Box CEO and co-founder Aaron Levie said the combination of the cloud and post-PC devices was fundamentally changing the IT industry, creating new ways for people to work and collaborate at businesses of all sizes. “This strategic relationship with Telstra is critical to our entering new regions and cultivating our ability to connect with customers everywhere and helping them manage the once-in-a-generation transition to the cloud,” Levie said.
Telstra expects to offer Box to its Business and Enterprise customers in the coming months.
This investment makes absolutely no sense from either side.
Box has no need to work with a major company like Telstra to enter the Australian market, given it already has a huge scale and the ability to build its own infrastructure in Australia and operate over any telecommunications network. The whole fundamental nature of the Box platform is that it is network-agnostic. It also doesn’t need Telstra’s puny $10 million to expand its operations; not when it has access to the best of the US VC markets.
For its part, Telstra won’t get much out of the Box relationship either. There is absolutely no reason why major organisations should tie their Box accounts to Telstra, which would have the effect of restricting their network choices down the track. Australian Box customers should simply ignore the Telstra relationship and get billed directly from Box in the US (as many doubtless already are).
This deal is indicative of the poor investment decisions which Telstra tends to make with its investment arm. It tends to invest in companies which it believes will provide bolt-on services to its own business; what it doesn’t seem to realise is that there is little synergy between those businesses and its own; some, as in the case of Box, are deliberately designed to work around the limitations of legacy telcos.
We’ve also seen Telstra go down this path before, with companies such as Microsoft and its Office 365 platform. Most of these kinds of initiatives have failed for Telstra; there is really no reason to suggest this one will succeed. Sounds harsh? Well, I’ve been reporting on Telstra for almost a decade now. The company goes through the same cycles constantly.
Image credit: Box