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Dropbox invests in building out on-premise storage as user numbers soar

Cloud-based file share and sync service reveals details of its hybrid cloud strategy, which has seen it invest large sums in building its own on-premise infrastructure

Dropbox is now storing more than 90% of its users’ data in its on-premise storage infrastructure, claiming the change in strategy works out more cost-effective than using cloud.

The firm previously used on-premise datacentres to host its web servers, as well as the metadata attached to the data and documents its users upload. Behind the scenes, the latter files were stored in Amazon Web Services’ (AWS) Simple Storage Service (S3).

Over the past two and a half years, the company has embarked on a push to wind down its reliance on S3 by ploughing investment into building an in-house storage system of its own, it revealed. 

The shift towards moving more of its infrastructure on-premise began with a soft launch in August 2014. This saw the firm test the process of mirroring its data between two regional locations, before moving to store and serve files to customers from its in-house infrastructure in February 2015.

The company was initially working towards having 90% of its users’ data stored on the infrastructure by the end of October 2015, but completed the process several weeks ahead of schedule.   

In a blog post, Akhil Gupta, vice-president of engineering and infrastructure at Dropbox, said – given the sheer amounts of data Dropbox is responsible for – building its own infrastructure makes good economic sense for the firm.

Read more about Dropbox

“One of the key differentiators is performance. Bringing storage in-house allows us to customise the entire stack end-to-end and improve the performance for our particularly use case,” wrote Gupta.

“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 customise both the hardware and software, resulting in better unit economics.”

Dropbox continues AWS partnership

The news follows on from Dropbox’s announcement on 7 March 2016 that 500 million people worldwide have signed up to use the file share and sync service since its launch in 2008, with 75% of them based outside of the US.

In parallel with its push to store more of its user data on premise, Dropbox is expanding its use of AWS outside of the US, a source told Computer Weekly.

“They have decided to move more of their US storage on-premise because – as a storage products company – it is more strategic for them to own their own storage,” the source continued.

The blog post goes on to say that Dropbox will continue to partner with Amazon “where it makes sense” for users. It currently has plans in place to expand its use of AWS services to store data for German business users later in 2016.

“We were an early adopter of Amazon S3, which provided us with the ability to scale our operations rapidly and reliably,” the blog post continued.

“Amazon Web Services has – and continues to be – an invaluable partner. We couldn’t have grown as fast as we did without a service such as AWS.”

Cloud strategy changes

Dropbox is not the first high-profile, large-scale AWS customer to decide they might be better off building their own infrastructure than using its cloud services.

Online gaming company Zynga embarked on a similar move in 2011. It said it could cut costs by curtailing its use of AWS and building its own datacentres instead, before abandoning the strategy several years later.

Mark Pincus, the company’s then CEO, confirmed the move in the company’s first quarter conference call in May 2015. He explained that, while the company needs to scale up its data analytics activities, investing in datacentres is not required to achieve that.

“There are a lot of places that are not strategic or appropriate for us to have scale, such as running our own datacentres. We’re going to let Amazon do that,” he said.

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As we have been both observing and pointing out, the on-premises environment is shrinking but not disappearing. IT is not moving en masse from on-premises to the cloud, but rather achieving a balance of resources between on-premises and cloud environments. The real sea change is the move from CapEx to OpEx. In our estimation on-premises OpEx and in-cloud OpEx will be roughly equivalent in the long term, while CapEx will shrink to a small niche.
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I agree that money is pretty important :-) but it's not the only factor when companies have to make the in-house/cloud decision. For many companies, control over their data is still paramount, and the idea of shipping that valuable info somewhere else isn't appealing. Compliance and security issues still prevail, and many companies get tripped up by bandwidth/latency issues when they try to implement hybrid environments--or simply try to migrate their data in or out of a cloud service.
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It's cyclical. Everyone will go opex for a while, and then there'll be some technology development or management issue that will start the pendulum going the other way.
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