NEW YORK (TheStreet) -- As Box opened its books for the world to see, many potential future investors were taken aback by the company's soaring sales and marketing expenses, which were exceeding total revenue dollar amounts.
With the markets distracted by the costs revealed in the S-1 filing last month, important announcements made by Box at its first developer conference about two weeks ago flew under the radar.
Just two days after the S-1 came out, the company unveiled plans to its platform, including a pay-as-you-go model that will allow a shift from the pay-per-seat platform pricing plan. It also showed off an enterprise app store, the ability for developers to build richer applications with the introduction of metadata support, and the unveiling of enhanced cloud-based document viewer, Box View.
The company's moves to keep adding capabilities to its platform ensures that it stays interesting for developers to build on, and that the developer community grows to become the primary constituent of Box's ecosystem should give the extra confirmation that dollars are being wisely spent at Box. For Box, the successful wooing of developers will foster steady, long-term enterprise-customer generation and retention.
"Developers will light up your product to the market in ways that you can't do yourself as a company, so you go to a great extent to court them, and that's what Box is doing -- and they're on a relatively well-worn path," said Rob Koplowitz, Forrester vice president principal analyst serving CIOs. "Winning over the developers is a necessity for a company that is betting on the enterprise 100%."
Keenly aware of that, Box CEO Aaron Levie recently underscored that the company's future lies in platform, rather than the storage, and file sync and share services that helped raise the company's profile. Last month, right before Box Dev, Levie predicted at a South by Southwest session that Box's platform will become the core part of its business within five years.
The new platform pricing model that Box is going for includes free usage for up to 25,000 API actions and $500 a month per every additional 25,000 API actions. The aggressive pricing plan for developers in particular now puts Box on a tried and true path for fast-tracking the lock-in of enterprise customers. Such moves have helped both Microsoft (MSFT - Get Report) and Google (GOOG - Get Report) do very well in this market.
The stakes are high for Box to speed through the developer avenue, given that enterprise is essentially the company's only market, in which it is also still a relatively new player. The four giants Box is up against, IBM (IBM - Get Report), Oracle (ORCL - Get Report), Microsoft and SAP (SAP - Get Report), already have very strong developer communities and their hooks in some of the world's largest and most complex enterprise IT environments.
Meanwhile, Dropbox, a Box competitor, is building out enterprise capabilities coming from a very strong user base of 275 million users. Developers will see the momentum potential in the Dropbox's vast user base. Yet if consumer-facing Dropbox fails at its pursuit of a second income, it will still have a strong consumer base to fall back on. Box on the other hand would fail miserably if it doesn't succeed in the area. "Box is going right after the enterprise and in this instance right after the developer market and that opens up opportunities for them in terms of competing with Dropbox," says Koplowitz.
The Dropbox Platform was announced last year at the kickoff of Dropbox's first developer conference.
The good news is Box's platform, which has been lauded for engineering feats, is already quite mature. The platform from the enterprise perspective is much further along than Dropbox's and is made for fulfilling demand for light weight, mobile, secure, collaborative, and task-driven tools and applications. The older systems from the four giants are not optimized for that.
Developers can also use the Box Platform to build out new, smaller applications that can integrate back into Oracle, IBM, Microsoft and SAP.
Box has the right platform and ongoing enhancements. And its aggressive pricing plan changes are a step in the right direction to fully leveraging the platform's ability to guarantee that Box stays ahead of Dropbox in enterprise and retains its exciting reputation as a disruptive force in the market. The key now is to make it as easy as possible for developers to give the platform a try.
Currently Box's platform has 35,000 developers, with more than 1,000 partners in its OneCloud mobile app ecosystem. It's a good number, but still needs improve much more considering Dropbox's mounting user base. Many of that user base could very well be individual developers looking for ways to handle both personal and business accounts.
"It's definitely all about the platform," says Alan Pelz-Sharpe, research director for social business at 451 Research. "For Box, it's very significant. The new pricing model lowers the barrier for entry -- there's really no reason not to try it if they want to. And I think makes sense because frankly, if we look at Box's numbers, they need to get more enterprises on board. It's as simple as that. Particularly moving towards the [$250 million] IPO."