Dropbox considers going public

Unlikely to float for anything near the $10bn it was valued at in its last funding round

Dropbox, the cloud storage company, is considering an initial public offering (IPO) in 2017 in a public share flotation intended to take advantage of the current vogue for technology stocks.

The company has, according to Bloomberg's "people familiar with the matter", arranged meetings with advisers to discuss the possibility. The moves represent a big shift from the company that only last year said it had no plans to go public.

In its last round of funding, the company was valued at $10bn, but a number of investors in that round have since written down the value of their holdings as it has become increasingly clear that cloud storage is very much a commodity service, and that other vendors have made more in-roads into the all-important corporate market.

More tellingly, its main independent rival Box went public in 2015 and currently has a market value of $1.63bn - well below its value when it went to IPO.

While Box targeted the corporate market from the start, Dropbox focused on consumers, including students, who have proved reluctant to purchase subscriptions to extend their capacity on Dropbox from 2GB. Some have argued that neither Box nor Dropbox are suitable for the enterprise.

Dropbox (and Box) also have to compete with Google and Microsoft with Google Drive and Microsoft's OneDrive services. Indeed, OneDrive comes bundled with Office 365, which is widely used by corporates, and which therefore drastically cuts the size of the market that both Box and Dropbox can realistically address.

Nor is Dropbox profitable, although it claims that it has become cash-flow-positive and has some 200,000 businesses subscribing to its services, according to its CEO Drew Houston. In a bid to attract more corporate customers - particularly major corporates - the company has extended into offering more cloud-based collaboration tools, a move that mimicks Box's strategy.

This year has seen comparatively few technology IPOs, despite the high prices attached to dot-coms and technology companies in mergers and acquisitions this year, such as LinkedIn, which is in the process of being acquired by Microsoft, and ARM, the British chip designer that is being taken over by Japan's Softbank in a £24.3bn acquisition.

Dropbox, meanwhile, was also subject to criticism from US National Security Agency whistleblower Edward Snowden in 2014 when he described it as "hostile to privacy".