Today Microsoft announced some very substantial changes to OneDrive storage. OneDrive is of course Microsoft’s consumer cloud storage product, formerly named SkyDrive. When the service first launched in 2007, early users received 5 GB of online storage. This amount was increased to 25 GB per user in 2008. The service was changed again though in 2012 limiting new users to 7 GB of free storage, however existing users could be grandfathered into the old 25 GB tier, and at that time the free storage tier was more storage than competing cloud storage solutions such as Google Drive and Dropbox.

Times have changed though, and responding to the recent free storage increases and paid storage price drops implemented by Google, Microsoft has now increased the free storage pool to 15 GB. According to Microsoft’s internal data, 75% of users have less than 15 GB in their OneDrive at the moment, with the remainder likely being on some sort of paid tier. This is certainly a bonus to anyone who is using OneDrive or thinking of using it, but the big news comes attached to a subscription service.

On April 28^th, OneDrive for Business announced a file storage increased from 25 GB per user to 1 TB per user coming in the next couple of months, and now that same 1 TB per user is coming to all subscribers of Office 365. Office 365 Home, Personal, and University subscriptions will all include the 1 TB of storage starting in July. Let’s go over what each tier gives you and their pricing:

Office 365 Home has just had a big amount of value added to it. For $100/year, users now have access to 5 TB of online storage, as well as the complete Office Suite for five people. Even if just looking at the storage available, this is a big advantage for OneDrive over the competition right now with Google offering 1 TB of storage for $120 alone.

But what if you don’t need Office? OneDrive has also had its price slashed for just storage tiers by 70% to be competitive with Google Drive:

Clearly Microsoft is hoping to get some consumer lock-in with these tiers as it would be difficult to move away from their services if you have a couple of hundred gigabytes of data stored with them. Whether it works or not will remain to be seen but it’s an impressive offering, and something that other cloud storage vendors can’t really compete against because like it or not, Office is still an important tool for a lot of people. When Office 365 first launched, it was an interesting idea to try to migrate people from pay once own forever software to a subscription service, but at the time the value-add wasn’t really there other than always having the latest version. Considering a lot of people may only have bought Office Home and Student for around $100 (which allowed up to three installs) it was a tough sell to try and get people to switch over to paying $100/year for basically the same service. Today’s addition as well as the recent tie-in of Office365 with both the iPad and Android versions of Office can possibly sway people who were on the fence.