Box (box.com) is an online file sharing and personal cloud content management service for businesses. The company provides cloud content management solutions to more than 4 million users and companies ranging from small businesses to Fortune 100 companies, including GE and Procter & Gamble. The company employs a "freemium" business model and provides users with up to 10 GB of free storage for personal accounts.1 Aaron Levie, CEO and co-founder of Box, describes the thinking behind the "freemium" business model: "Purchasing decisions have been traditionally made at the top, with software more or less forced upon employees, gift-wrapped in training manuals and convoluted policies. But with the advent of user-friendly, free online tools, the balance of power has swung in users' favor."2 So, when businesses evaluate low-cost, on-demand alternatives to traditional enterprise solutions, the first services they will consider are those that their employees know and are already using. While some early investors severely questioned the wisdom of the idea of offering the service for free (i.e., "you're crazy"), Levie feels that the firm has demonstrated the promise of the business model over the past 10 years. In fact, he provides six reasons why a software company would be crazy not to give out software for free:3 Lower friction drives faster adoption: hook users early and get their data. High marketing leverage: your users are your most powerful evangelists. It forces you to make a much, much better product: give users a compelling reason to upgrade. Sales will love you: your leads are people who already want your product. Reach traditionally impenetrable markets: your product will seep into new—and sometimes surprising—ecosystems. If users don't want to pay, they don't have to leave: you only lose customers to yourself. 

Question Evaluate the "freemium" business model that Box, Inc. employs for personal accounts, isolating the benefits and potential limitations the strategy presents for the firm. Does the freemium business model hold promise for firms that compete in other industry sectors? Explain.