Microsoft Gives Unlimited Cloud Storage To Office 365 Customers

Microsoft began offering free, unlimited cloud storage for Office 365 customers Monday, shaking up the market in a move that will reshape the cloud storage landscape, said channel partners.

"Today, storage limits just became a thing of the past with Office 365. Moving forward, all Office 365 customers will get unlimited OneDrive storage at no additional cost," said Chris Jones, corporate vice president, Windows Services, in a post unveiling the offer on Microsoft's OneDrive blog Monday. Pricing for Office 365 starts at $6.99 per month.

Microsoft Monday began rolling out unlimited storage for consumers, including Office 365 Home, Personal and University customers. The Redmond, Wash.-based company will add unlimited storage for OneDrive for Business customers to the Office 365 road map in the coming days, with plans to begin rolling out in 2015 for First Release customers, Jones said.

"This is a huge, aggressive move by Microsoft that will have Google, Box, Dropbox, and you name it, rethinking their business model," Chris Pyle, president of Boca Raton, Fla.-based Champion Solutions Group. "Companies are going to be rethinking their storage practices, budgets and who they are doing business with."

[Related: Microsoft Mobile-First Cloud Strategy: Improved Tech, More Partners ]

Pyle said that that while the storage market has been a race to zero, Microsoft is the first company to actually reach that milestone.

"Any company that stores data to file server and any company paying someone for cloud storage is going to rethink their storage policies and budget," Pyle said. He said for Microsoft partners, the move creates opportunities for consulting with customers about best document and storage best practices, encryption and security.

The move comes as companies such as Dropbox have slashed their pricing. In August, for example, Dropbox cut its pricing for 1 TB of storage to $10 a month following similar moves by Microsoft and Google. Amazon, on the other hand, has been the lone holdout, charging $500 a year for 1 TB of storage.

Pyle said with pricing drifting so quickly to zero, it's his job to help customers focus on data reliability, security and permission. "As prices on free to low-priced storage have dropped, the number of decisions a company faces on how much to pay and for what grows. Customers care about free, but more importantly they need a solution that works for them."

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 234 on the CRN Solution Provider 500 list, said the reason Microsoft is first offering the free storage in the consumer market is because consumers will be more forgiving with regard to what he called Microsoft's "horrible" support than business customers.

Venero said Future Tech itself has experienced that "horrible" Office 365 support firsthand with an Office 365 calendar problem that ended up with one of his support engineers on hold for more than six hours. "That infuriates me and my support staff and makes it a hindrance for us to sell Office 365 to the business community because the support levels are not proper," he said.

As for Microsoft's promise to put unlimited storage for Office 365 business customers on its road map with first release in 2015, Venero said he will be sure to caution business customers to go into such an Office 365 agreement with their "eyes wide open, understanding the technical support challenges" and the issue of potential outages.

"From a support and outage perspective, business customers need to be aware of the challenges with Microsoft," he said. "They shouldn't expect the same level of support they would get from a local VAR with an on-premise Microsoft Office subscription."

Venero, who is in discussions to bring on Google Docs, said he sees Microsoft as a vendor that is very difficult for VARs to work with as a strategic partner. "We sell tens of thousands of [Microsoft] licenses per year, and we still have a challenge engaging with them as a business relationship," he said. "It is more of a tactical relationship versus a strategic relationship, and no matter how often we bring up the challenges with Microsoft or in the press it seems to fall on deaf ears."

Microsoft's Jones said the launch of unlimited OneDrive storage for Office 365 customers is just part of Microsoft's broader cloud storage strategy.

"While unlimited storage is another important milestone for OneDrive, we believe the true value of cloud storage is only realized when it is tightly integrated with the tools people use to communicate, create and collaborate, both personally and professionally," Jones said in the post. "That is why unlimited storage is just one small part of our broader promise to deliver a single experience across work and life that helps people store, sync, share and collaborate on all the files that are important to them, all while meeting the security and compliance needs of even the most stringent organizations."

Jones said Microsoft is planning more announcements in coming months as part of its "quest of making OneDrive the world’s cloud storage leader."

Steven Burke contributed to this story.

PUBLISHED OCT. 27, 2014