If there was ever a perfect example of how the Cloud should work for normal people like you and me it must be Dropbox. It you don’t know what it is, you are either a hermit living in a cave or don’t have an issue with storing and forwarding big files, or any files for that matter.

For the uninitiated, Dropbox is what today’s computing is all about – being able to access your files from any of your devices, anywhere and also be able to give others access to them, all done securely. It is essentially a storage mechanism in the Cloud but what makes it really special is that it is free (up to 2GB) and it looks and feels, for all intents and purposes, just like a local hard disk on your device. If you need more space you can buy it by subscription or get up 18GB extra space free just by referring friends at 500MB per referral.

Once you sign up and load the app, Dropbox magically appears on your finder and you are free to save files immediately, any files. Apple’s iCloud limits what application files can be stored and is very clunky to use. Google’s Drive that requires you to login with your Google credentials, something many people, like myself, prefer not to have to do. Dropbox is simply there and it works.

Despite being a ‘free’ service, Dropbox has generated over $500 million in revenues over the last year. A recent Forbes article investigating this phenomenon reported that it has over 100 million users (double what it had one year ago), manages 100 billion file saves every day, and does all of this with less than 250 employees. No wonder there were stories out that Apple wanted to buy it. Even the arrival of many new competitors, including Google, has not dampened its popularity or growth. It was rumored to be worth $4 billion last year, this year it seems the sky is the limit.

If you are wondering how, four years ago, the Dropbox founders had the foresight to go into cloud storage solutions, one can only guess. They could not have foreseen the introduction and runaway success of smartphones and tablets, both of which are now driving their massive growth. It is obvious to device makers that adding extra memory increases their build costs, but today companies like Samsung and HTC are bundling Dropbox with the products as a cost-saving and customer attractive feature.

Simplicity and function, coupled with a ‘freemium’ offer has allowed Dropbox to blitz its competitors to date, and it’s a tough model to compete against. CSPs now jumping into the Cloud and online services space should take Dropbox as the ideal case study, better still, partner with them and like the device makers, benefit from the cost model Dropbox can offer as a bundled product. The collaborative Pro and Team products that Dropbox offers SMEs and enterprise customers definitely lend themselves to partner bundling.

Of course, that may all look too easy for some CSPs that have made an art form out of complication. There will be telco executives, and vendors no doubt, that will build fantastic business cases for an in-house offering, but you can almost guarantee that, longer term, this will be the wrong choice. Working with the best, like Dropbox, might rub off some of that OTT magic CSPs have been dreaming of.

First published at TM Forum as The Insider, 15 November, 2012