Microsoft is making changes to sweeten the deal on its cloud storage service, especially for customers who use Microsoft’s OneDrive or Office 365. On June 23, 2014, Microsoft increased the storage space for all Office 365 users to one terabyte, extending the offer it released to OneDrive for Business customers back in April.

New Storage Details

The storage offer is especially good for Office 365 Home subscribers, who can now have one TB of storage per person using the license, and up to five people, as part of the monthly $9.99 (MSRP) subscription fee. Tip: Head over to our online store for significant savings. Office 365 Personal users receive one TB per individual subscription at $6.99 (MSRP)per month. Office 365 University users also receive one TB per subscription at the price of $99.99 (MSRP)for four years.
People who use OneDrive but not Microsoft Office 365 also get increased storage. Microsoft is now offering 15 GB of free storage to those users, up from 7 GB. Further storage is available at reduced costs.

Why Microsoft Is Offering More Space

Office 365 offers some unique advantages to customers but users have been slow to adapt the service, preferring to own the license instead of renting it. 1TB of storage space removes one of the common barriers people claim prevents them from migrating. Microsoft has a financial incentive to move people to a subscription based service rather than a purchased license model. It is easier to support and provides a more stable cash flow for the company. This is becoming more appealing to software powerhouses as evidenced by Adobe’s abrupt move to Creative Cloud.

Offering more storage space for free becomes a bigger draw, as more people move their files into the cloud. Files stored in the cloud are accessible anywhere there is an internet connection, meaning that people can have access to all of their digital information everywhere they go and on any internet-connected device. If available storage space is large enough, people don’t need to think about what to store in the cloud vs. what to store locally. Everything can simply be uploaded to the cloud with very little fuss.

Cloud storage becomes even more important when it is closely integrated with other services, as Microsoft does with its Office 365 software and other products. Having storage integrated seamlessly with the software people use makes using that software simpler. The less people have to think about where their files are and the easier they can access them, the more likely they will be to use a service and stick with it. So increasing the amount of storage available to customers is a move to make Microsoft’s other software and services more appealing.

One TB is effectively an unlimited amount of storageFor many users. As reported by ZDNet, Microsoft chose 15 GB as the new limit for its free OneDrive storage because the company’s data indicates most people have fewer than 15 GB of files stored. For many of Microsoft’s customers, then, it appears that increasing storage limits just to 15 GB will reduce storage costs and perhaps convince people to move more of their files online.
The Office 365 Home subscription seems to be an especially good deal now. If one member of the family has an exceptionally large media collection, it’s less likely that they will use up the entire amount of free storage available, making the service more useful to the entire family.

Competing With Other Services

Microsoft also needs to keep pace with other services that are offering cloud storage, if it wants to keep customers using OneDrive. For example, earlier in the year, Box offered 50 GB of free storage to people who downloaded updated versions of its iOS apps. Storage is relatively cheap to provide and the price is dropping; this is why companies like Microsoft not only are able to provide more storage to customers, but ultimately need to do so. Value is shifting away from simply providing storage to providing services and software that make use of the data stored online innovatively.

Microsoft needs to keep offering great value to prospective customers in order to draw more customers for its OneDrive and Office 365 services. Increasing the amount of storage available to an effectively unlimited amount means that customers never need to think about how much storage they have to pay for, while giving Microsoft the opportunity to provide new services that interact with customer data in valuable ways.