Nipping at Dropbox's heels

There is a real resurgence of cloud storage taking place since Dropbox first launched some years ago and quickly rose above (and for the most part crushed) its competition at the time.  I'm going to highlight what I thought was going on earlier in the year, what's happened since then, and then highlight two new services.

Earlier this year I wrote about p2p file sharing as a threat to Dropbox, particularly the Cubby service.  The problem is, Cubby got their pricing model wrong (you have to pay for DirectSync, their p2p product) and haven't changed it.  Too bad for them, they'll never compete successfully with Dropbox in this way.  I don't expect them to disappear any time soon, but I do expect them to idle along as a bit player in the cloud storage space.  However, if they switched their Directsync feature into their "Basic" (freemium) package and focused on a pay model of central mirrored/subset storage for backup and faster syncs of critical data, it could still be a different story.  But probably not for much longer.

I also looked at BitTorrent Sync earlier this year.  I had various issues with it and while I like it, and ultimately lost trust in it due to regularly disappearing files from a folder I had under test between several machines.  I no longer use it although in the right circumstances I might still use it (e.g., mirroring a lot of content between multiple locations for a limited duration and easily verifiable results).  I continue to think that BT Sync will remain in the tech fringes for now - they will continue to be hampered by the need for a central server (is the server really secure?!), shared secrets approach (who can see my secrets and my files?!) and lack of open source (what am I really installing on my box?!)

Two interesting things have happened since then in the cloud storage world:

1. A new service called Copy has been making the rounds.  The good news is that you receive 20GB up front (if you activate your account through a referral link; otherwise you receive 15GB for direct signups).  This is 10x more space than Dropbox's upfront free 2GB of space.  I'm using Copy a lot now rather than Dropbox.  Copy has built their own infrastructure rather than using Amazon's AWS as Dropbox has done, I'm assuming that's given them much better cost structures and allows for this much greater level of freemium marketing. After a few weeks of testing, I switched to using it actively.  I've now been using it for a few months, no issues.  [Disclosure: If you click the links above you get 20GB rather than 15GB because its a referral and yes I get free space for the referral - thank you very much!] [Postnote: Warning! See comment below]
2. On the p2p storage side I stumbled on ownCloud.  I have it running on my own cloud IaaS server (Digital Ocean - working great and dirt cheap at $5 per month for a basic server instance) and have a few nodes connected to it.  It feels clunkier than Dropbox and Copy, but it does seem to work and most importantly, it's free! I'm testing it now and haven't switched to using it as a primary cloud file store yet.  [Note: I've only used at as network storage, not for Contacts and other features.]

Last thing to note - I've given up on BoxCryptor and moved on to using an OS X Extended/Journaled 256 bit AES, sparse bundle disk format on each of these cloud services.  I've had to give up multi-platform access that came with BoxCryptor but on the positive side I'm not paying a yearly subscription to BoxCryptor and I have filename encryption as well.  I'm currently testing volumes in Dropbox, Copy, Google Drive and ownCloud, so far so good with all of them. [Postnote: read comments for a pain point on this approach].

So that's how things look in August 2013 for best practices in cloud storage:

• Use Copy.  It works.  Much more storage for free.  Good for non-technical folks.  Or just keep using Dropbox if you have enough storage with them and/or don't mind paying for your storage.  [Postnote: Warning! See comment below]
• If you're technical enough, use ownCloud on your own server.  It looks viable for a do-it-yourself if that's important to you and it's opensource as well.
• If you're technical enough, value security, and don't need multi-platform access to your files, use an encrypted multi-file filesystem like OS X's sparse bundle format to store your folders and files [Postnote: see comments].

A Closer Look at BitTorrent's SyncApp

A few hours after publishing my previous blog article on p2p File Sharing - a Dropbox Killer?, I was very proactively contacted by Kos Lissounov, in charge of development for BitTorrent Sync.  I received a SyncApp tester invite and was able to test-run the product on three devices in a sync group (2x OS X, 1x Windows 7).  Kos and I also had a good and professional back-and-forth of emails and he provided thoughtful answers and comments.  It wasn't my intent to dive down the rabbit hole with SyncApp and BitTorrent security models, but some hours later...

I'm pleased to say that the "pre-alpha" version of BitTorrent SyncApp worked fine for it's main purpose at this point - quickly move around lots of files and data between a specific group of devices.  In particular, bringing a third device into the share group (all on same LAN and nicely linked together - no need to hit the cloud to download files) during my tests ran even faster with two sources of data available to bring the third device into sync.

However, to clarify the key assumption I had when writing the p2p File Sharing - a Dropbox Killer? article:  Can p2p sync replace my day-to-day use of Dropbox, but with unlimited data and at much less cost or for free?  Implicit in that assumption were all the usual points of comparison in the back of my mind: features (vs Dropbox), Just Works (stable), cheaper (for big data sets under sync), faster, more reliable, better usability, more secure, etc.

Based on this, here are a few additional comments about Bit Torrent SyncApp:

1. Empty folders are not synced.  Per Kos, this deficit is recognised and will be added.
2. Version conflicts are simply ignored.  However, rather than warning or in any way indicating a conflict, the client just silently ignores the conflicted file.  Version conflict management is apparently tough to implement.  I don't think any type of merge function is required, but I do think a visual warning and changing file names to highlight the conflict is.  Just imagine the issues trying to unpick file conflicts inside of BoxCryptor's "Package" folder with silent failure and removal of a single file from synchronisation...
3. Their is no API yet.  One could imagine an app simply accessing SyncApp folders via the filesystem on bigger devices (no API required) and using a secret to access a set of folders/files on a mobile device via an API.
4. Usability is generally a big deficit.  Features like iconic representation of sync state (as done by Dropbox) in a Finder and File Explorer window aren't present.
5. A "relay" server is required to connect devices via shared "secrets" if the devices are not on the same network and if the peers haven't otherwise previously communicated with each other.  Of course, if one device is a phone or laptop with regularly changing network parameters (on the move between networks), the relay will have to be used to link up the devices.

Items 1 and 2 above for me are showstoppers if my use case is to replace Dropbox with SyncApp.  Items 3 and 4 are painful, but might be tolerated for awhile.  Item 5's relays and "secrets" is tricky to judge because I don't fully understand the security implications.  Let's drill into relays and secrets a bit more.

Relays are a key enabler of the BitTorrent SyncApp approach.  They perform the following functions:

1. Recommend (not approve if I understand the protocol correctly) the sync of a folder/file set between devices by seeing identical encrypted secrets and recommending the two devices sync with each other.  The two devices must still directly authenticate each other (without the relay involved) - the specifics of this authentication are unknown to me.
2. Facilitate/broker communication between devices that can't otherwise discover or communicate with each other that have the same secret - deal with firewall issues just as BitTorrent clients do today.
3. Relay (SHA256 encrypted) information between two devices if the two devices can't otherwise send information between each each other.

Relays do not see any unencrypted data.  They do see and manage SHA256 encrypted "secrets".  Relays store all their information in memory, nothing is persisted to disk.  If the relay goes down then the secret relationship between devices may have to be rebuilt (depends on the device to device access and what specific functions the relay was required for in a given setup).

The concept of the shared "secret" is interesting.  It is a way to enable devices to join in a group to share content.  It has a similar feel to a Bluetooth PIN that is asserted by one device and entered by the other to allow communications between them.  Each folder (and subordinate folders and files) has a unique secret.  Relays (for now a public/shared one run by BitTorrent) are used to coordinate devices with the same secret that can't otherwise find and/or communicate with each other.

I can see two security holes with the "secret" approach:

1. A secret could be sniffed from the wire and used by a malicious SyncApp client to attempt to join a group of devices with the same secret.
2. The relay manager (for now the BitTorrent company) could manually insert malicious devices into the relay's device management system.

Kos clarified that the secret is encoded via SHA256(SHA256(secret) - therefore the password (or "secret") is stretched but not salted.  Also that it would be possible to get a list of peers but in order to join a sync group you would have to decrypt the AES256 handshake with the peer with the key SHA256(secret).  Again, I don't know the details of the protocol that engages between the two devices to actually approve joining a sync group so actual joining may be blocked.

Regardless, I remain uncomfortable with the security provided by the "secret" approach as it is today without fully understanding the protocol and implications.  This is also a showstopper for me with respect to using SyncApp to replace Dropbox at least for sensitive information.

Kos indicated a "Should device X be allowed to join this group?" a challenge will be added to SyncApp in the future to help address security concerns.  People/companies can also run their own relays meaning that they can control everything for their sync groups.  However, I think without a central service (relay or otherwise) to provide authentication and authorisation for users, devices, and secrets the product will remain limited from a usability and security perspective.  The Bit Torrent company's obsession with fully distributed, no-master, p2p approaches may really limit long-term market acceptance due to usability and security limitations.  I believe it will also limit their ability to see product adoption beyond a technical community (in which it may excel, just as it has with BitTorrent itself) and in turn be unable to monitize the product.  Even if BitTorrent did put in a central auth server (and even nominally charge for it to make money), would it be trusted given their brand position?  This is where products and companies like Cubby and Skype may have an advantage.

Even more than before, after this review of BitSync I think services like Dropbox, Box.Net, and Skydrive will struggle to compete with p2p sync as their whole business model is tied up in users consuming and paying for cloud disk space.

One use case for which BitTorrent SyncApp excels today is for a fairly technical user to simply keep a group of media files in sync, for example a photo archive on your laptop while you're on vacation being synced (automatically backed up when you have an Internet connection) to a PC running at home.    None of the above issues hold back adoption of SyncApp today for this use case.  In fact, switching to SyncApp for bulk media and other big files (e.g., install images, video, audio) and using Dropbox just for docs and simple workgroup collaboration is a good possibility for me once I'm comfortable SyncApp is sufficiently stable and Just Works.  Of course, even if SyncApp or another similar p2p product closes the feature gap with Dropbox, I still couldn't eliminate Dropbox completely because their first mover advantage is incredible and they are really bedded into the Way the Internet Works now.

If SyncApp can get past their "must be p2p only with no central auth server and keep track of nothing" view of the world and add in some of the features I've covered in this entry, I think it could become a viable Dropbox killer and be meaningful part of a "post cloud" Internet world.

p2p File Sharing - a Dropbox Killer?

I've been a big fan of Dropbox since it came out, even with the security ups and downs along the way.    They offer plenty of storage for free and it Just Works.  However, two recent announcements have got me thinking about how a competitor might go after Dropbox and other similar (mostly inferior!) products like Box.Net, Microsoft Skydrive and Google Drive.

Background - Some Recent Announcements

The first announcement was from a company called LogMeIn, and their new network storage and sync product Cubby.  Cubby's subtle twist versus Dropbox is that they offer p2p syncing called "DirectSync" (no "cloud" centralised data store required).  LogMeIn has been around for a long time and their product/service Hamachi has been a semi-tech way to set up a VPN between systems - basically a "Goto My PC" for a slightly more technical audience.  Here is the important bit: they have a long history as a p2p communications enabler (UDP hole punching, STUN, TURN, and related tricks) to make the p2p Hamachi service (and now Cubby) work in a behind NAT and firewalls.

The second announcement was by BitTorrent and their new Sync product.  BitTorrent is of course the eponymous creator of the bit torrent protocol, very successful at creating a broadly adopted way of sharing files.  It is also a p2p, no cloud required, network sync product.  BitTorrent, the underlying protocol, also has a very well established p2p communications enabler.

(Postnote: See also subsequent blog article A Closer Look at BitTorrent's SyncApp for related information.)

Now, who is the biggest, well-known p2p service out there, one with a very effective p2p communications enabler scheme, plenty of money and technical capability behind them?  Skype of course, with Microsoft's deep pockets and Skydrive capability.

Dropbox: You've been warned.

Network storage and sync: Cloud vs p2p

Of course, we don't really need a cloud service to sync directories and files between multiple devices.  rsync and boatloads of scripting around it has been been around for many years.  What Dropbox and others did was combine rsync, a cloud-based backup and control location, and It Just Works software with sufficient and simple usability to make it all work.

Skype has shown us that a p2p approach, with highly functional p2p communications enablement  to hook everything together, works just fine.  Articles on Skype discuss this very point of how they keep their infrastructure costs down by only setting up communications between two people (two devices), not actually handling the communications data itself unless they have to (setting aside group coms, super nodes and must-do coms relays to simplify a bit).  Skype wisely focused on value-added services like Skype Out to generate revenue.

BitTorrent has shown us that a flexible and lightweight p2p connection broker service can copy (sync!) massive amounts of data quickly.  And because p2p "cloud-based" components (mostly) only manage connection and data location coordination and don't manage the actual content like Dropbox does, they are light, inexpensive, and resilient (especially against content-rights litigators!).

What's the Minimum Viable Product feature set to push p2p sync over the line?

In addition to the fundamental idea of p2p sync, I think there are a few additional key features to create this new, hypothetical, revenue-generative p2p-based Dropbox killer:

1. Just Works

• Dropbox absolutely gets this one right
• With less reliance on the cloud, this should be even easier in a p2p world
• Stable (no Microsoft BSODs), fast
• Doesn't crush system performance by pigging all available disk I/O for indexing, CPU for sync calculations, Internet or local network I/O for sync transfers (if possible, sync via directly on a local LAN with no public Internet bandwidth required to shovel data between devices)
• At least the efficiency of rsync in the sync approach (e.g., block level not file level syncing)
• Works in corporate environments with strong firewalling (e.g., relay if necessary, uses typically unblocked outbound ports 80/443)

2. Pervasive - available on all high-use platforms and applications

• Desktop, Laptop - OS X, Windows, Linux
• Mobile - OS X, Android
• Application access: simply local filesystem use where possible (desktop/laptop) or an API for sandboxed environments like mobile

3. Secure

• All data sent over the network is encrypted, both to peers and to the cloud based service coordinator (e.g., public/private key)
• Service coordination:
• Authenticates you as a valid user, your account information, including billing information for billable value-add services
• Authorises your nodes you want to keep in sync
• Authenticates and authorises other's nodes you are sharing data with
• Knows nothing about your data (no relay function unless required - and even then only passes through encrypted information)
• All data is encrypted at rest in each participating node (see BoxCryptor - a big hole and opportunity in Dropbox's offering)

4. Usability

• BitTorrent really struggles here (indexing, trackers) but a viable connection coordinator (e..g, Skype, Cubby) would solve this problem.
• Tight filesystem integration (like Dropbox)
• Async recognition of folder/file changes
• Iconic representation of sync status in Finder/Explorer windows
• Clear, simple communication of sync status between devices within a client and potentially iconically:
• Which device(s) has the master/newest version of a file (think BitTorrent's Seed/Leech)?
• How synchronised is is a file, directory, or everything? (as a % complete)
• How "safe" is a file?
• # of master/complete copies (# of devices on which file fully exists)
• Are devices geographically distributed or co-located? (client asks OS for location info if available)
• Basic management of sync conflicts
• Visual notification of conflicts (Notification, Finder/Explorer iconics)
• Filesystem filename changes (as per Dropbox)
• Client logfile of existing, unreconciled conflicts with basic guidance on how to clear them
• Can flag and manage favourites and high-priority sync choices
• Camera/photo find and sync - I use this for all photo sources now

5. Sharing folders/files with others via syncing

• BitTorrent excels at this, but not in a secure way
• Use the cloud service coordinator to authenticate invited users; local node authorises access to authenticated users

What does this new p2p network storage and sync world look like?

Fast forward to a world where a company like BitTorrent Sync or LogMeIn Cubby has successfully deployed a working, free + billable services p2p sync product that has the required MVP features to compete with and beat Dropbox.

The user downloads/buys the software for each device they want to sync/copy their data between - just like Dropbox.  The client includes a simple dashboard indicating sync status and data "safety".  The client can administer all participating nodes and shared folders.  Client is a gateway to buying additional services.  User can see status of all devices, summary of content all on devices, when device was last sync'ed/seen.

Offer a user a "free" version of something that feels close to what Dropbox is today, but enables the synchronisation of an unlimited amount of data across any number of personal devices.  In fact, in general the more devices you store the data on, the faster sync happens and the "safer" the data is.

Why can't Dropbox and similar existing services do this today?

They could certainly do some of it, particularly around simplified usability.

However, Dropbox and most others have a legacy business model and investment in cloud storage, not p2p.  This will hold them back from p2p.

I'm not sure Skype can pull this off either.  Now that Skype is owned by Microsoft, one can guess the internal politics between Microsoft's Skydrive and the new Skype team will slow any progress to develop this to a crawl.  Besides, Microsoft rarely demonstrates Internet-first thinking.

What that means of course is that a new player like Cubby or BitTorrent Sync may be able to slip in.

How to make money in p2p

BitTorrent never made any money on p2p.  Just a big "thanks" from the tech-savvy Interent community for the protocol that has enabled fast and resilient file sharing for years.  However, I have a penchant for actually making money as well as technical elegance, so here are some ways that might happen with a p2p sync product.

Software sales.  Clients must be purchased for each platform you want to synchronise between.  I think users would generally accept a single shot, nominal software fee for client software purchases.  Certainly after beta and pre a mass-market ramp.  Each new device type is a new software purchase.  BoxCryptor and 1Password successfully use this model.

Services.  Much to the frustration of the media rights holders, p2p (a la BitTorrent) doesn't enable a path for them to make money.  They key of course is offering truly valuable services on top of the p2p service.

Cloud based service coordination.  I think a small fee per year could be charged after the first year for data relay, authentication and similar coordination/security services.  Certainly enough to cover related operational costs.  Looks like Cubby is doing this today.

The most obvious way to generate revenue is to create value-add services on top of cloud storage and data transfer to/from cloud storage.

A backup service is the most obvious value-add offering.

Basic backup service.  User's want to be confident that their precious documents and digital photographs are backed up to a safe and secure location.  Particularly if you build in having a separate geographic location being an important criteria to receive a "Your'e safe!" rating in the status dashboard for data redundancy.  From a security perspective, cloud based backups must be a "locked box" with only the encrypted format of the file backed up to the cloud and with only the user having the key to decrypt the files (client side de/encrypt) - not like Dropbox that store all your data in their cloud servers in an unencrypted format.

Versioning service.  Deliver as an extension to backup, perhaps like Apple's Time Capsule as a growing number of people understand the Time Machine concept.  Pay as you use for frequency and size of backups/versions.

High value local application data backup services.  Some of the below are structured data files meaning backup may not just be a simple copy.  Seek and suggest high value targets for sync and backup by offering a billable backup extension:
- Photos, iPhoto DB

- Contacts
- Calendar

- Email (local)
- Video
- 1Password DB
- BoxCryptor DB
- iTunes purchased music
- Purchased software
- ...

High value social/internet backup services.  Offer each as a billable backup extension.  A little like Facebook's timeline, but platform neutral.  Use APIs to pull out social media contributions and references:
- Email (hotmail, google, ...)
- Facebook
- Twitter
- LinkedIn
- Blogger
- ...

Web-based publication service.  Provide cloud storage and controls to Internet publish and share your content.

Specialised hardware.  Offer dedicated NAS devices that directly support the p2p sync protocol or license the protocol to NAS makers (BitTorrent Sync hits this point).  Offer from 1 to 5 disk chassis.  The sync client will automatically discover any new device connected to the local network and offer to configure it for you.  Usability will be critical.

Technical Challenges

I didn't say there aren't technical challenges here.  A few of them might be:

1. How does each node determine which file is the master among all nodes?  When to sync the newest versus flag a sync conflict and rename files.  Will have to develop a strategy around inaccurate system clocks.

2. Mobile versus desktop/laptop.  How do you manage limited space and CPU access on mobile devices versus always-connected and plenty-of-horsepower desktop/laptops?  Caching and sync prioritisation is tricky in a mixed node environment.

• User can explicitly mark high/low priority data (BitTorrent client "Transmission" has this feature) - always a high priority or just a high priority until everything in sync then back to normal priority
• User can explicitly mark favourites to imply an on-going high priority
• Automatically identify "hot" files through regular/frequent/recent use.  Files you are actively working on are implicitly prioritised for sync across all nodes.
• Amazon Kindle's approach to "cloud" vs "device" location of books is a good usability model to consider and will educate mainstream users on this model
• Always prioritise what user is asking for right now in the front of the sync work stream, ahead of what is pending (for other reasons) to be sync'ed.

Bits and pieces

There are a few other factors to consider when looking for Dropbox weaknesses.

Dropbox incurs a competitive disadvantage bourne of their very successful "share with a friend" referral model to build up membership - a whole bunch of freeloaders aren't paying for the service but still creating operational costs.  Of course, freeloaders don't cost Dropbox - the costs are borne by customers who pay for Dropbox services by paying somewhat more than the true cost of their service.  Assuming you don't sync media and just stick with documents, 5GB of free storage is room plus the refer-a-friend space bonuses can store for *a lot* of documents.

Unfortunately, Cubby appears to have copied the Dropbox business model instead of offering (e.g.) a limited duration trial and aggressive shutdown of freeloaders.  I would recommend that Cubby emphasise unlimited space free syncing for one year then charge for value-add services like data relaying and cloud backup.

Dropbox also has a higher cost by hosting their storage in AWS' S3.  They must be at a point where a dedicated in-house equivalent service with an S3 simulation wrapper around it would be cheaper.

Dropbox is still semi-technical in nature - further usability improvements are possible.

BitTorrent including their name in marketing their Sync product will be a mistake if mass-market usage is their goal.  BitTorrent file sharing has in part been inhibited from wide-spread public acceptance because of its association with illegal activity (media rights violation).  However, so long as I'm sharing my own (rightfully obtained) files… at least between my own devices… for my own use... there should be no violation.  There will have to a be a temptation with the BitTorrent approach of course to co-mingle media sharing with sync which will also inhibit mass-market acceptance.

The p2p approach to storage will take a long time to be adopted in corporate environments.  Just look at the struggle of Skype and Dropbox in the Enterprise continuing even today.

Conclusion

There is an emerging trend now to think "mobile first" in development.  Companies that are oriented toward browser based "traditional" Internet service consumption are at risk because a mobile first equivalent can come along and end-run them.  Similarly, p2p for network file storage and sync could easily become a disintermediating force for file sync and share services that currently think cloud first.  Is p2p sync a viable product in the "post cloud" world?  At least in this use case?

So who might pull this off?
- Although Skype *should* be the best horse to bet on, the Microsoft purchase, "Internet Last" thinking and internal politics may kill all hope
- I don't think BitTorrent Sync will be relevant to go mass market - too much baggage.

So that leaves LogMeIn Cubby can pull this off and steal market share from Dropbox and other "last year's tech" cloud storage and sync providers.  Of course, there are all the other MVP features above they need to get right as well, which is chancy.  Or perhaps some other startup or early/quiet competitor whose ramping up their operation right now…

(Postnote: A blog article specific to Bit Torrent's SyncApp was written a few days after this one.)