Exclusive: Dropbox Is Rolling Out a Private Network to Speed Up File Access

Jun 19, 2017

Dropbox, the file storage company that bucked conventional wisdom by moving 90% of its data out of Amazon Web Services cloud and into its own data centers, is at it again.

The San Francisco company is building its own international private network to make sure users abroad can access their files—most of which reside in those aforementioned Dropbox U.S. data centers—faster.

"What people don't realize about the Internet is that it is very 'bursty' and can hit bottlenecks," Akhil Gupta, vice president of engineering at Dropbox tells Fortune exclusively. That is why the company is ripping out third-party load balancers and replacing them with its own software running on standard Linux hardware. Insulating itself from the balky Internet is also the reason Dropbox is contracting to use its own dedicated fiber cable to carry that traffic.

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Load balancers, as the name implies, make sure network traffic is routed to minimize bottlenecks and slowdowns. F5 Networks (ffiv) is a leader in load balancer technology, along with Citrix (ctxs) and Radware (rdwr), according to Shamus McGillicuddy, senior analyst at Enterprise Management Associates, a tech research firm.

"We want to make user experience as real time as possible since 70% of our users are outside the U.S. and most of the data lives in North America," says Dan Williams, Dropbox's head of production engineering. Dropbox still partners with Amazon for customers in some countries, like Germany, which require user data to stay in the country of origin.

Dropbox stores more than 500 petabytes of data for customers, including their documents and presentations but also music and video. People use Dropbox and similar services to store all their digital goods.

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"There are fewer than ten storage systems bigger than us, all of them run by companies with more resources than us. It's a pretty elite group," Gupta says. That elite group would include such web giants as Amazon (amzn), Facebook (fb), Microsoft, (msft), and Google (goog).

"We essentially purchase dark fiber within the metro areas and leased services for the long haul across the Atlantic and Pacific. We're not in the business of laying cable—only a few companies in the world need that sort of capability," Williams says.

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Dropbox's new regional points-of-presence in Sydney, Miami, and Paris are slated to come online in the third quarter of this year, with Madrid and Milan to follow in the fourth quarter. At that point, Dropbox can claim 22 facilities in ten countries.

In shifting away from the public Internet to its own private network, Dropbox is repeating its past move out of Amazon's public cloud to its own data centers. That migration dumbfounded critics, who said most companies are going in the opposite direction, opting to put more work into a public cloud data center rather than building more data centers of their own. Dropbox was definitely seen as swimming against the tide.

Still, what Dropbox is doing with load balancers also mirrors what has happened in other segments of tech infrastructure. Big cloud companies now contract out the manufacturing of their own computing and network hardware to be built to their specifications. That is bad news for companies like Hewlett-Packard Enterprise (hpe) and Cisco (csco), which made their fortunes selling branded, proprietary hardware. And that is also the reason many of those companies have pushed more into software and other businesses.

For the last two quarters, HPE, for example, blamed slumping server sales on a single large customer, reported to be Microsoft, which had cut its orders drastically.

In any case, time will tell if Dropbox going its own way in cloud infrastructure was the right move. In April, Dropbox CEO Drew Houston said the company, a tech unicorn that has yet to go public, is EBITDA positive. That means it generates a profit once interest, taxes, depreciation, and amortization are excluded.

Note: (June 19, 2017 12:55 pm.) This story was updated to include mention of Dropbox financial status as described by its CEO.

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