Google just crushed Dropbox's dream of becoming your one-stop storage destination

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REUTERS/Karoly Arvai

One of the announcements that drew the loudest cheer from Google I/O on Thursday was a new service called Google Photos.

Google Photos is a service that lets you store and share photos and videos on the web. Users can back up their photos and videos on it automatically, freeing up storage space on their smartphone or tablet. It also comes with smart image recognition technology that's capable of sorting photos under specific terms. So if you look for "Snowstorm in Toronto," it will automatically find all relevant pictures.Best of all, it comes with unlimited storage space - for free.
And that means Google just made life a lot easier for many people, including its 900 million Gmail users worldwide. Who wouldn't be happy about a free, unlimited storage app that saves all your photos?

Dropbox, for one.

Last April, Dropbox launched a new photo saving app called Carousel. It basically backs up photos stored in Dropbox and automatically organizes them by time and location. It offered up to 5GB of free storage for signing up, but the idea was eventually to get consumers to pay for storage beyond that point.

Dropbox at the time made Carousel a central piece of its new company-wide vision called "Home for Life," where Dropbox serves as a platform for other daily productivity apps.

Unfortunately, Carousel never took off. It's hovering around #600 in Apple's AppStore, and getting less than 5 million downloads on Android's Google Play.And now with Google Photos - which looks and feels almost identical to Carousel, but only with free, unlimited storage - Carousel has a hard road.

That means there's only more pressure on Dropbox for Business, its premier service targeting business customers, to ramp up sales. The file storage space in general is heading to something called "race to zero," where companies essentially charge nothing for dumb storage space. They have to provide value in other areas, like security and collaboration, which is what Dropbox for Business is designed to do.

"Unless they pull something amazing out of the hat from the consumer space, I would say the consumer space is not going to make any money for Dropbox anymore," a former Dropbox employee told us in a previous interview. "Their opportunity is really going to be on carving out a decent market size out of Dropbox for Business."

Dropbox declined to comment on this article.

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