Facebook Inc (FB) Partners With Dropbox

File storage company, Dropbox, announced yesterday that it would now offer integration into the social networking site, Facebook Inc (NASDAQ:FB). This integration will give Facebook users the ability to share files in Facebook Groups with Dropbox.

As a leader in the cloud storage space, Dropbox has seen an onslaught of competition from big names like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Google Inc (NASDAQ:GOOG). These companies all have their respective personal storage software—Google with Google Drive, Apple with iCloud and Microsoft with SkyDrive.

Facebook Inc (NASDAQ:FB)

The market could be huge, which explains why it has attracted the attention of these tech giants. Gartner estimates that consumers will store more than a third of their digital content in the cloud by 2016, versus 2011—where only 7 percent of consumer content was stored in the cloud.

According to Dropbox, the Facebook Inc (NASDAQ:FB) integration will include the functionality to comment on or ‘like’ the files and digital content posted, while also having document and file edits/updates pushed to group members automatically. Facebook Inc (NASDAQ:FB) had previously made plans to launch its own file sharing and storage software, but it now appears the company has abandoned this and entrusted Dropbox with this task.

The company’s offering storage services have free and paid plans. The different plans are show below, revealing various differences in what users can subscribe to. However, in reality, 5 GB is more than enough for most individuals, and 2 GB is most often sufficient. Thus, part of the differentiation of these companies lies in the company’s partners, integrations and overall usability.

Dropbox, Facebook

The switching costs are virtually nonexistent and really only takes the time to move the files. However, Facebook Inc (NASDAQ:FB) could give Dropbox some ‘stickiness’. Being one of the first companies to make a push in personal storage, Dropbox still boasts 50 million users. Couple this with Facebook’s 950 million users and this could be the start of an interesting relationship.

Of the over 400 minutes that Facebook users spend on the site each month, the Dropbox integration could mean more time spent on the site, where users move away from email to interact directly on Facebook, sharing itineraries, project materials and other content.

The other personal storage companies do have advantages given they have other user bases from which they can draw users from. For example, Microsoft’s can easily integrate its SkyDrive software into its operating systems and Apple can pre-install its iCloud onto its computer devices.

Fortunately for Dropbox, it is solely focused on personal storage and can use its entire team to develop its product. Unlike other companies, that have various revenue streams and primary business models that lie outside of the personal storage market, Dropbox has been centered on making personal storage a reality for everyone. It has done well with this—now having 66% of its total user base using Microsoft’s Windows, while 21% use Apple’s Mac OS, and the other users using a blend of the two or other systems. Also, as with everything, mobile is becoming increasingly important—Facebook Inc (NASDAQ:FB) has seen this first hand with 67% of its users now using Facebook via mobile—Dropbox has developed a mobile app for both Apple’s iPhone and Google’s Android mobile operating system.

To further put things in perspective—Dropbox is definitively punching above its weight class—it is speculated that the value of Dropbox is somewhere around $4 billion, while the market cap of the other companies are well above this. Apple trades with a market cap around $630 billion, Google $248 billion and Microsoft $251 billion. Even its new partner, Facebook Inc (NASDAQ:FB), trades with a market cap around a sixth of Google or Microsoft at $43 billion.

However, in all fairness, none of the other companies started paying close attention to the personal storage market until Dropbox was off and running. Apple attempted to purchase Dropbox in 2009, and when Dropbox declined to sell, Steve Jobs reportedly told them he was going after their market. This has not fared well for Apple yet. Apple’s iCloud service launched last year, but is still trying to gather traction.

Also, the social enterprise and CRM company salesforce.com, inc. (NYSE:CRM), recently announced a digital storage and sharing system, Chatterbox. However, it appears that Chatterbox will be limited to collaboration within a company. Salesforce.com has been an impressive force in the CRM industry, up 50% year to date, and announced a recent partnership with Twitter, as well having acquired Buddy Media—all this rapid growth puts the company’s forward P/E at 75. Box, the other notable personal storage startup, and included in the chart above, has been a nuance to Dropbox. Box has managed to gather 10 million users and has been reported to be valued around  $1.2 billion.

Dropbox is banking that Facebook Inc (NASDAQ:FB) will give it the leg up to continue to pull ahead of Box, as well as keep the likes of Google, Apple and Microsoft at bay.