Microsoft to double OneDrive free space, slash extra storage prices up to 73%

Will also bump Office 365 Home, Personal subscribers' allotment to 1TB next month

Microsoft today announced it would double OneDrive's free storage space for consumers to 15GB from its previous allowance of 7GB.

The expansion of the free tier, and other changes to OneDrive, will take place in July.

Microsoft's moves come as all the major players are scrambling to offer customers more for less. Earlier this month, Apple said it would cut prices by up to 70% for paid iCloud plans. And last week Amazon said that users of its Fire phone would have an unlimited amount of storage for photos taken with the device's camera.

Along with the doubling of the free allotment, Microsoft also said that it would hand subscribers of Office 365 Home and Office 365 Personal -- the two consumer-grade rent-not-own plans -- 1TB (terabyte) per user, up from a comparatively paltry amount of just 27GB. Students who have subscribed to Office 365 University, an $80 four-year program, also will receive 1TB free of charge.

The bump to 1TB per user on the consumer side matched the move Microsoft made in April on Office 365 commercial accounts.

Microsoft will also slash prices for additional storage for those consumers and students who need more than the standard 15GB or 1TB. An extra 100GB will cost $1.99 per month -- or $23.88 per year -- 52% less than the current $50 annually; the price of 200GB will also drop by 52%, from $100 per year to $3.99 per month ($47.88).

The cuts appear deeper when compared to the monthly payment plan Microsoft offers as an option: Then, the new prices will be 65% to 73% less than the current ones.

On a per-megabyte-per-year basis, the new OneDrive paid-plan prices of about 24 cents will be competitive with Google Drive's 100GB bump-up (also 24 cents) and Apple's 200GB offer (24 cents), but will remain twice that of Google's 1TB deal (12 cents).

Apple has said it will offer a 1TB iCloud plan, but has not revealed what it will charge for that amount.

The new prices also give Microsoft's Office 365 a massive storage edge over Google Apps, the search company's cloud-based application suite. The free-to-use Google Apps for consumers comes with 15GB free storage space, or just 2% of Office 365's upcoming 1TB allotment.

"The landscape is changing to the point that we believe it's no longer enough to provide only cloud storage - that's table stakes," said Omar Shahine OneDrive's group program manager, in a Monday blog.

Jan Dawson, an independent analyst at Jackdaw Research, agreed with that last week when talking about Apple's iCloud strategy. His comments then would have been as pertinent to Microsoft's moves today as Apple's a week ago.

"[The idea] is to add value to their own ecosystem," said Dawson at the time. "[And] I don't think it's about making money at all."

Instead, Dawson argued that companies charge for their storage space to create a mental commitment to the service. "It's more a psychological effect. Think of Amazon Prime. Because I'm already paying for it, I may as well buy from Amazon because I get free shipping. So I commit to it emotionally," Dawson said.

Microsoft will boost the default OneDrive storage space, and reduce prices for those paying extra, at some point next month. "For current subscribers, you are all set, you'll automatically be moved to the lower prices," said Shahine.

Microsoft's new OneDrive prices will be much more competitive, equaling or beating all but Google's 1TB plan. (Data: Amazon, Apple, Dropbox, Google, Microsoft.)

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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