Meet Zocalo, Amazon.com's Answer to Box and Dropbox

Amazon just unveiled a new service to enter a fast-growing market. Here's what investors need to know.

Jul 12, 2014 at 10:30AM

As if Amazon.com's (NASDAQ:AMZN) Web Services division wasn't already growing fast enough, the web giant is back throwing its weight around again. 

On Thursday, Amazon unveiled Zocalo, a fully managed enterprise storage and sharing service, complete with administrative controls and feedback capabilities. With Zocalo, Amazon lets users store, share, and gather feedback on everything from documents to spreadsheets, webpages, presentations, images, PDFs and text files. Translation? This is Amazon's entrance into the already-crowded space currently being occupied by the likes of Box, Dropbox, and Microsoft OneDrive, and Google Drive.

But if the infrastructure is there, why not use it? According to Amazon Zocalo and Web Services GM Noah Eisner, "AWS was increasingly being asked to provide an enterprise storage and sharing tool that was easy to use, allowed users to quickly collaborate with others, and met the strict security needs of their organizations. That's what Amazon Zocalo was built to do."

For perspective, here's a quick intro to Zocalo uploaded by Amazon this morning:

To be sure, all the usual bells and whistles of an enterprise-centric storage solution are there. But administrators can also delight in managing Zocalo, which is encrypted in transit and at rest, offers easy-to-set, user-specific sharing policies, and can integrate with existing corporate Active Directory accounts so users can utilize their existing enterprise credentials. And users can access and sync data stored in Zocalo on any device, including laptops, iPad, Kindle Fire, and Android tablets.

In true Amazon fashion, Zocalo priced aggressively at just $5 per user per month, with each user allotted 200 GB of storage -- and that's on top of a free 30-day trial with 200 GB storage for up to 50 users. For Amazon WorkSpaces customers, Zocalo is free for up to 50 GB of storage, or $2 per user per month for up to 200 GB. 

By comparison, Box charges the same $5 per user per month for its Starter plan, but it only allows for a maximum of 10 users and 100 GB storage and doesn't include Active Directory integration. To get that, Box users need to upgrade to its Business plan for $15 per user/per month, which requires at least 5 users and allows for a 1000 GB storage. Dropbox similarly offers a 1000 GB, $15 per user per month plan.

Here's why Amazon is diving in head-first
So what does Amazon have to gain? For one, the enterprise cloud storage and collaboration market is growing quickly.

Before Box first delayed its IPO in May, for example, its S-1 registration statement revealed its annual revenue most recently grew 111% to $124.2 million in fiscal 2013. As Box invested heavily to capture market share, however, it incurred a massive net loss of $168.6 million over the same period. Even so, only a few days ago Box raised another $150 million in private equity funding which valued it at roughly $2.4 billion.

And back in February, SEC filings revealed that Dropbox had raised another $325 million, and all amid speculation it was seeking a potential IPO valuation of at least $8 billion on 2013 sales of at least $200 million.

But even putting aside the fact those valuations could be wildly optimistic, you can't blame Amazon for wanting to step in and take a slice of the pie. Amazon still lumps Amazon Web Services revenue into its vague "Other" category, which itself grew nearly 58% year-over-year in its most recent quarter to $1.26 billion. Amazon Web Services is estimated to comprise more than 80% of that total, which already makes it a $4 billion per year business.

In the end, if Amazon can add a few hundred million in incremental revenue through Zocalo without significantly distracting from its core businesses, there's no reason this move can't be a big win for shareholders over the long-term.

Amazon isn't the only one threatening existing businesses
Speaking of disrupting industries, Warren Buffett recently admitted another emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Google (A shares), Google (C shares), and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers