Is cloud storage a commodity? That’s a question that’s been on the minds of investors and industry specialists over the past six months. Giants like Google and Amazon continuously lower their monthly storage prices in what looks like a race to the bottom. Meanwhile, high-profile startups like Dropbox and Box have delayed their IPOs, indicating that the Apples and Microsofts of the world might be stunting their growth.
Other cloud storage companies have zeroed in on specific verticals or (sometimes minute) problems in hopes of differentiating themselves. SugarSync, Cubby, SpiderOak, Bitcasa, and a slew of other startups claim their storage service is better, cheaper, more secure, and more flexible than other high-profile competitors.
Perks aside, in the eyes of the consumer that’s only looking to store a few movies and some guitar tabs, one key ingredient is missing from most cloud services – fun. For better or for worse, most cloud storage services are the virtual equivalent of an actual urban storage space: no frills, visit only when needed, and bring your flashlight because it’s dark in there.
Hive, a Hong Kong-based startup with staff in Eastern Europe and California, is hoping to win over average consumers with some visual sheen and a social spin. Even though it’s built on a folders-and-files scheme, a cruise through the website and reveals how Hive stands out from its competitors. Files are laid out thumbnail style, and can be accessed inside Hive’s web app through a built-in media player. Individual storage collections are called hives, and users are encouraged to share their hives with friends they invite onto the service.
It’s still a storage service through and through, but in Hive’s case, a little branding and design go a long way. Individual Hives feel less like utilitarian warehouses and more like personal treasure chests you can show off to friends. Founder Thierry Lehartel tells Tech in Asia that this minor reinvention of the concept of storage – one that’s more about “collecting” than “storing” – addresses a genuine market void.
“We don’t want to be a utility, we want to be a destination,” says Lehartel. “When you think of media, you think of Facebook, because that’s where people go to share media. You don’t think of Dropbox, even though that’s where people store media. Dropbox still follows a very standard taxonomy – you have folders, you have files, you have links, and you can share a link. It’s damn simple and has a fairly lean UI, and they’ve done a fantastic job. But I don’t think they’ve created a UI that drives engagement.”
“There’s a social aspect to cloud storage that hasn’t been tackled,” he adds. “At the end of the day you want to use cloud storage to manage your data. But the question that hasn’t been answered is, “How can we have users share their data in a way that fits the cloud storage model?
With so many other storage options available, Hive has to fight hard to get users to sign up. Moreover, since Hive, in theory, is more fun when one’s friends are on it, the company looks set to face the same chicken-and-egg problem most social networks face: users won’t join unless other quality users are on it, but how can one attract those quality users in the first place?
Lehartel hopes to clear this hurdle by ditching the preferred business model of like-minded companies. Instead of charging for set storage amounts – free 20GB, 50GB for US$10 a month – Hive will offer unlimited storage, completely for free. Users who pay monthly subscription fees can access higher-quality media streaming. Premium pricing decreases as a user invites more and more friends onto Hive.
According to Lehartel, this model not only helps drive adoption, it prevents users from double dipping. The more media that one stores on Hive, the less media one stores on iCloud or Dropbox.
“If you look at the market, everyone is fighting and using the same model – the pay-per-gigabyte model. That’s fine. But from our perspective, we see that as a limitation to adoption. When you look at stats for conversion on those services, you’ll notice that a lot of people just keep opening up free accounts on different services to bypass those constraints. How do you flip that around, and bet on premium functionality that resonates with a large part of the base? We think people value media. Think about it – what’s driving consumption of the internet in general? It’s media.”
Advertisements will also play a part in Hive’s revenue model. Right now, just before you play a movie uploaded to its cloud, Hive will broadcast an ad from one of its sponsors. Lehartel claims that ads will be targeted based on data obtained at registration as long as one signs up through Facebook or Google or Twitter, and not from snooping through actual files. Even though sharing is encouraged,
Hatching the honeypot
There’s no doubt that Lehartel has tapped into uncharted territory by trying to make cloud storage an experience, rather than a tool. As a movie buff, I’m proud of the films I’ve collected on my external hard drive, and wish there was a space I could share them with friends. Toss in some comments and voting features, and Hive could evolve into a sort of “Path meets Dropbox”-type application.
But given Hive’s focus on media, Lehartel’s true competitor might not be the Dropbox’s of the world, but the Spotify’s. As media streaming services expand worldwide and license more content, there’s less need to collect media in the first place. Just ask iTunes.
Ironically, one of Hive’s partners faced the same dilemma and lost out. Qvivo, a Hong Kong based business-to-business cloud service provider, launched in 2011 as a service quite similar to Hive. About two years later, it pivoted to a white label model, abandoning its consumer-facing service altogehter. It now powers Hive’s media encoding technology. Qvivo founder Liam MacCullum tells Tech in Asia investor interest and economic realities necessitated the pivot away from consumer-facing media storage:
“As services like Netflix started to roll out globally, that definitely had an impact on us. The Qvivo audience was always very tech oriented, and were hardcore media collectors. We probably struggled to bring that a bit more mass market. We quickly found that the most valuable part of our IP was cloud storage and media encoding. That was why SingTel invested in us, and that was where shareholders saw value.”
Unlike Hive, Qvivo didn’t ship out with a pseudo-social network built in. That’s what Lehartel sees as its trump card against the streamers.
“When you look at all the incumbents from the media and entertainment industry and think about how to deal with the Spotify’s of the world, that’s where the battle is going from a media perspective. But when you look at us, our content is our users. Much like how Facebook today without the users would be nothing,” says Lehartel. “Obviously we’re media-centric. But I believe the power of the platform is that once you get high quality connections, you can deploy a discovery model that’s more effective than what other companies can offer.”
See: Evernote now has more than 30 million users across Asia
If Hive’s value is its users, how valuable is it right now? Lehartel won’t disclose the good numbers. But he claims that 20,000 people registered for the service following its full beta launch on October 13. The bulk of those users signed up as early birds following an open-and-shut alpha launch one year prior. Since Hive’s doors opened once again, he claims that growth has been “very strong.”
Hive is currently available only as a web app, but Lehartel says that native Android and iOS apps are on the way. The team is in the process of closing a seed round, but Lehartel has yet to disclose participating investors to the public.
Hive hopes to turn unlimited cloud storage into something social, fun, and free
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