[Andrew-Dufresne]

Thanks. This makes sense. Numbers of similar files will surely increase with the increase in the number of users.

Also, there could be several users who do not consume the allocated space completely all the time. Using your argument, this too will have positive effect on their revenue model.

It IS brilliant!

[marcamillion]

Exactly...see the thing is, in my model - I never even accounted for that case (the users that don't use up all their space), because technically that is like a current liability. In that at any time, those users can lay claim to their free space - so Dropbox has to be able to give them that free space.

So technically, it wouldn't make much sense for them to really consider that against their profit margins. Although, over time I am sure they have realized that X% of their users never use up more than say 1GB (and various levels) of their storage - so you may be right. But I didn't want to get into all of that because of the questions surrounding it.

It's really the structure of the way they charge for storage and the way they pay for it.

I can't think of any other company that can do what they are doing.

Amazon with their web services can't. A car rental company can't. Neither can a restaurant, retail store, manufacturer of anything, nor a hotel or anything of that nature.

I can't think of any other business model (in history) that is as lucrative of what they are doing.

I would love for someone to provide a counter example, because I think I am going crazy - because it is very rare that you find something 'too good to be true'. But this might be one case, for the founders and investors, that truly is.

Unless they mess it up.