Dropbox — Almost in the Cloud

I’ve been told that “Dropbox” is a good place to store files in the cloud. Is that true?

While I’m a big fan of Dropbox and use it all the time, technically speaking, it is not a cloud storage location. Here is a link to the Dropbox website: https://www.dropbox.com/

Dropbox is a wonderful online extension to your desktop computing, but it’s missing a key cloud component as we’ll see.

When installed, Dropbox puts a folder on your desktop computer. It looks and works like any other folder (or directory) on your computer. You move files into your dropbox folder; you take files out of your Dropbox folder. If you put a Word document into the Dropbox folder, then you can edit it in Word directly in your Dropbox folder.

So what’s the big deal?

The big deal is that you can put your Dropbox folder on every computer you use (home PC, laptop, work computer). You can even put it on your iPhone. Any files you store in the Dropbox folder are synchronized among all your computers. If you edit a file in the Dropbox folder at work and then return home, the file is on your home PC is identical with the file at work, with all the edits you performed at work in place. If you take your laptop to a hotspot and make a change to the file, the version on both your home computer and your work computer reflect this change.

Dropbox has one more trick. Your files are accessible online (once you log in to the Dropbox website). If you visit a friend and use his computer’s browser, you can log on to Dropbox.com and access your file. You can download the file to your friends computer, make changes in the file and then upload it to Dropbox.com. Now your laptop, home computer, and work computer will all have this update. Amazing!

But you said Dropbox isn’t a cloud computing site. It sure sounds like one. Why isn’t it in the cloud”?

The key component that Dropbox is missing for cloud computing is there is no software to process files at the Dropbox website. Remember when you were at your friend’s house you had to download the file to his PC to work on it. That’s because there is no wordprocessing software (or other document processing software) at Dropbox. Even when you worked on your file at work, home, or on your laptop, your computer had to supply the software. If you didn’t have Word on one of the computers, then you couldn’t edit the file in the Dropbox folder.

So Dropbox is a wonderful way to alway have access to a file on all your computers, but you have to do your processing on those computers and not in the cloud.

Dropbox lets you store up to 2 gigabytes of data for free online, just not in the cloud.

Retirement Planning in the Cloud

A friend of mine is approaching retirement.  She would like to get an overview of all her investments, both retirement assets and non-retirement assets.  She would like to see how her actual asset allocation (percent is stocks, bonds, and cash) differs from her desired allocation.  A spreadsheet would appear to be the best way to organize her data and make the projections.

The problem is that, while my friend has very good records and knows exactly how many shares of each stock and mutual fund she owns, she has no experience in designing spreadsheets.  Since I have some experience in designing spreadsheets she asked me to help.  But I don’t  have access to her data.  She is willing to let me see her data, but no one else.

I suggested we collaborate together using a Google Docs spreadsheet.  I explained the concepts of cloud computing to her and she decided to create a Google account so she could use Google Docs. Besides the ability to collaborate on a spreadsheet in near real-time, Google Docs had an additional attraction.  It contains functions that can look up the price per share of both stocks and mutual funds.  So my friend only needs to enter the number of shares she owes for each investment and the spreadsheet will look up the current price per share and multiply the two to calculate the current value of each investment.

I created a spreadsheet and made my friend a collaborator.  We both opened the spreadsheet.  She entered the name of the first investment and I could see it on my screen a second or two later (we were talking on the telephone as well).  I entered in the formulas to obtaining the share price for that investment and for calculating the dollar value.  Next I replicated this row several times and she editing the stock symbols and number of shares for each of her other investments.  While I watched these entries pop up on my screen I was entering in the formulas to sum each asset class.  On her screen she could now see the totals and for the first time had an accurate idea of how her assets were distributed.
Next I created a place for my friend to enter her “desired” asset allocation and the formulas to compare the actual asset allocation with the desired allocation.  While I was doing this she was entering in her desired allocation and we both saw how much the actual asset allocation differed from the desired allocation.  The final step was for me to enter the formulas to tell her how much money to move from one category to another so that the actual asset allocation matched her desired allocation.  This is called rebalancing.
The whole process took about an hour.  If we had been emailing spreadsheets back and forth it would have taken days.  Because we could both see what the other was doing in near real-time, if one of us did something wrong the other would notice and comment on the phone.  So we never wasted a lot of time doing things that would have to be redone when the other one saw it.  Real-time collaboration provides huge advantages over emailing documents back and forth.  If you have more than two people collaborating, the advantages multiply.