Dropbox is planning to build its own internal cloud for its storage service and wean itself off Amazon Web Services a bit.
The company said in a blog post that it has scaled to the point where it needs its own cloud infrastructure. Drobox noted:
We were an early adopter of Amazon S3, which provided us with the ability to scale our operations rapidly and reliably. Amazon Web Services has, and continues to be, an invaluable partner--we couldn't have grown as fast as we did without a service like AWS.
As the needs of our users and customers kept growing, we decided to invest seriously in building our own in-house storage system. There were a couple reasons behind this decision. First, one of our key product differentiators is performance. Bringing storage in-house allows us to customize the entire stack end-to-end and improve performance for our particular use case. Second, as one of the world's leading providers of cloud services, our use case for block storage is unique. We can leverage our scale and particular use case to customize both the hardware and software, and provide better unit economics.
The move highlights the argument for private clouds for enterprises that hit scale. Although some enterprises have gone all-in with cloud providers such as AWS, others have flipped back and forth. For instance, Zynga has gone cloud and reeled it back in all to look to infrastructure as a service again.
What Dropbox is seeing is that its scale can allow it to reach a point where its incremental costs go down relative to a cloud provider. The catch is that the company has to build its infrastructure, ramp it, maintain it and then get those savings. Should the company fail to scale and boost efficiency it may not see those economic gains.
Dropbox noted that it has the engineering chops and understands the exabyte-scale storage market. However, Dropbox is pursuing the hybrid route. The company said it will invest in its own data centers and work with AWS where it makes sense.
These moves are interesting as a spot story, but the real tale comes after a few years. Will Dropbox get the economic results that it projected on the white board?