Why Cheaper Cloud Storage Infrastructure Prices Is Actually A Good Thing For Box? CEO Explains

Loading...
Loading...

The cloud and cloud storage space has seen significant price cuts in the past few years. One would think that for a company that solely depends on such services for its earnings, price cuts will reduce growth and profitability.


However, Box Inc BOX CEO Aaron Levie thinks otherwise. Levie was on CNBC Monday to explain why price cuts in cloud Infrastructure is actually good for his company.


Cheaper Infrastructure = Lower Costs


“That’s (permanent deflationary pressure) a good thing for us because that’s the underlying cost structure of our business which goes down every single year,” Levie said. “So we were talking about hard drives a minute ago, as hard drives get cheaper and cheaper we actually, our core cost of goods sold gets cheaper and cheaper and all of the value that we build is the software layer on top of the infrastructure.”


“So, when you think about Box is unlike Amazon Web Services or Microsoft Azure or some of the pure infrastructure platforms our value proposition is software above the infrastructure. So, as infrastructure gets cheaper that actually lowers our cost.”


Value Is Increasing


Levie was asked to explain what he means when he says that the cheaper infrastructure lower costs for Box. He replied, “I want my cost to be less, which is what’s happening with storage and compute, but the value that we provide above the infrastructure actually is the premium on top of that.”
“And in fact actually over the past 4 or 5 years our costs have actually, our price per seat which is the sort of price per user on the platform has actually gone up and so even in a market where the underlying storage costs is going down, the value that we are providing has increased pretty rapidly.”

Loading...
Loading...
Posted In: CNBCMedia
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...