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Barclays: Here’s because Apple should acquire Dropbox (AAPL)


TIM COOK DREW HOUSTON 3
Apple’s Tim Cook and
Dropbox’s Drew Houston.

AP / Business
Insider


  • Apple CEO Tim Cook told analysts he wants to double the
    company’s Services income by 2020.
  • Barclays researcher Mark Moskowitz thinks Apple could do
    that by charging some-more people to use iCloud.
  • The company could do that if it combined “iCloud for
    Enterprise,” a workplace product.
  • And the easiest to create “iCloud for Enterprise” would
    be to acquire Dropbox, which Apple has previously
    considered.

Apple can repatriate $200 billion or some-more in abroad cash,
interjection to the Trump Administration’s new corporate taxation cuts, and
analysts are outdoing any other with
theories on how CEO Tim Cook will deposit that money.
Citi and
Goldman Sachs have already laid out competing theoretical
merger scenarios. 

Now Barclays researcher Mark Moskowitz and his group have dreamed up
a new candidate: Apple could acquire Dropbox, the cloud storage
company that’s
now streamer into an IPO.

Moskowitz’s speculation leans on
a matter finished by Cook in the last gain call, in
January: “It was another very clever entertain for services with
income of $8.5 billion, up 18% over last year, and we’re on pace
to grasp our idea of doubling the 2016 services income by
2020
,” Cook pronounced (emphasis added).

“Services” is all the income Apple earns from App Store sales,
iTunes, and other program products. A doubling of Services would
indicate annual revenues of about $50 billion per entertain in
2020.

That’s easier pronounced than done.

‘iCloud for Enterprise’

Sales of the iPhone are in decline, and the expansion of the
“installed base” of existent Apple users is modest. Barclays
expects it to grow at only 3% over the next few years. Within
Apple’s Services business, however, is one shred that obviously
has room to grow faster than that: iCloud.

iCloud has about 850 million users, Moskowitz estimates, of which
only 25% compensate for information storage. The rest use iCloud’s free
services. Apple could crow that if it introduced “iCloud for
Enterprise,” a workplace chronicle of iCloud that users could
entrance on their iPhones or Macs. A outrageous series of iPhone users
already use their personal iPhones for work. “iCloud for
Enterprise” would simply give those users a protected place to store
their work papers and communications. (Google already does
something identical on Android, by permitting users to simply switch
between their personal Gmail logins and their work logins.)

That’s the dream, at least. Getting there is harder than it
looks. Building an craving business — with all the necessary
relations with employers and craving program from other
competing companies — takes years.

It’s easier to acquire a company. Back in 2009,
Apple founder Steve Jobs did make a unsuccessful try to acquire
Dropbox. Drew Houston, Dropbox’s founder, rebuffed the offer,
and Jobs vowed to “kill” Dropbox by building a competing
product.

Unfortunately for Apple, that product was iCloud.

In the inserted years, Dropbox went on to turn the
best-designed, easiest to use, and many discerning cloud service
on the planet. iCloud, by contrast, is so
treacherous it is common for users to not know
what they’re storing in it.

‘Acquiring an determined company with existent enterprise
attribute and product facilities may be a better proceed than
inner development’

Hence, Moskowitz argues, Dropbox ought to be an acquisition
target:

“In the view, appropriation an determined company with existing
craving attribute and product facilities may be a better
proceed than inner growth since of the following
reasons: 1) New asset(s) could yield quicker entrance to
timeless craving comment attribute with thousands
of profitable organizations and millions of craving profitable users
immediately. 2) Competitive product suites in craving cloud
storage over just file storage, but also in reward features
like collaboration, third-party app integration, and content
analytics. 3) Much aloft pricing upside compared to currently
consumer-focused iCloud. 4) Potentially poignant synergies for
Apple. Looking at the marketplace landscape, applicable players in
cloud-based storage/document government embody Microsoft,
Google, Dropbox, Box Inc, and OpenText, etc. While we don’t
trust Microsoft and Google will be giving up their OneDrive and
G-Suite easily, companies such as Box Inc, Dropbox, and OpenText
could yield some singular assets.” 

Dropbox was last valued as a private company at $10 billion. It
has confidentially filed for an IPO that is approaching to be worth
much some-more than that. However, given Apple’s immeasurable unfamiliar cash
hoard, even if Dropbox was twice the cost it would be well
within Apple’s range.

Being means to charge business for a robust, flexible, workplace
cloud storage/management solution would be one way to get Apple’s
normal income per user from $3.90 per month (today) to $5.50
per month in 2020, the aim it must strech in sequence to fulfil
Cook’s promise, according to Moskowitz.

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