Venture Capitalist at Theory

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3 minute read / Mar 21, 2013 /

Why the File System Wars Will Trigger a Wave of Consumer M&A

You fool! You fell victim to one of the classic blunders - The most famous of which is “never get involved in a land war in Asia”

There is a land war being fought on the web and it’s for files and filesystems. Incumbents and startups alike are duking it out. And things are really starting to get interesting.

The startups, Dropbox and Evernote, reinvented the file system as a synchronized, cross platform file system abstracting the hardware and the data. Now they are moving up the stack. Dropbox’s acquisition of Mailbox and renewed focus on photographs and attachments and Evernote’s every growing battery of point applications like Skitch, Food, Hello and Peek aim to drive further file creation and user engagement within their notebooks.


The incumbents, Microsoft and Apple, leverage their own advantages heavily. Over the last few years, Microsoft and Apple, which own the most popular operating systems and the content creation applications, Microsoft Office and Apple iWork, have persistently revised their operating systems to unify the local and cloud filesystems (SkyDrive and iCloud). Google entered the fray seeking to displace Office with a web based document creation suite whose by-product was an online file system that evolved into Drive. Google’s recent Keep launch, a note taking application, is a shot across Evernote’s bow.

Along the way, the core value proposition to users has changed. The old war cry, liberation from disaster recovery and data backup duties, has been replaced by the promise of device independent, scalable, searchable filesystems that use the power of the cloud to afford new capabilities.

On Google Drive, searching for Eiffel Tower will return photographs from a user’s of the famed Parisian monument using image recognition.

Because end user applications and experiences differentiate these filesystems, I expect to see a flurry of acquisitions of next generation content creation tools that users love by these companies all in effort to create loyalty and build lock-in to a particular file system.

These might include photo creation tools, next generation presentation tools, developer API platforms enabling programmatic access to these file systems and potentially even content stores to compete with Google Play and iTunes. After all, movies and music and books also have to be stored in a file system. It may as well be the same one.

For users the promise of the cloud filesystems battle is better applications and experience. For startups, it means the beginning of the M&A wave.

Which startups do you think are most likely to be acquisition targets in the file system wars? Let me know what you think on this Branch.

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