Microsoft Boosts OneDrive Storage For Corporate Clients From 25GB To 1TB Per User

In the cloud storage wars, capacity is a weapon, and one that is rapidly losing its dollar value. Put simply: Companies that offer cloud storage are scrambling to add value on top of stored gigabytes, as the marginal dollar price that can be charged for that storage is rapidly dropping to zero.

Microsoft, making that point even more explicit today announced that it is bolstering its provided OneDrive for Business and Office 365 ProPlus products to one terabyte, up from 25 gigabytes in the case of the former.

In its blog post, Microsoft all but called out by name both Dropbox and Box as insufficient competition for its cloud products:

File sync and share solutions represent key capabilities that keep people on the same page and responsive. There are several solutions offered, many from companies that have sprung up to focus exclusively on this market. Some have come from the consumer world and are new to the enterprise software market and the requirements around delivering enterprise-grade cloud services. Others are focused on the enterprise, but only as a point solution. Few are prepared to meet the evolving needs of businesses looking for a holistic and comprehensive approach to meeting the full needs of their employees as they live a cloud first, mobile first workstyle.

Consider the shade tossed. Dropbox especially is working at the moment to grow inside the corporate space. Microsoft doesn’t want that to happen. (To its credit, Dropbox’s most recent crop of products are in fact beautifully designed. It will be interesting to see what sort of play they can receive in the enterprise. There are doubters out there.)

The financial dynamics at play here are incredibly interesting. As I wrote when discussing the Box S-1:

The [financial] pressure here is amplified by a host of competition, and declining per-gigabyte fees. This cuts at what Box can charge for a key part of its value proposition, as larger, better monied players like Google and Microsoft beat each about the ears. The dance that Google and Microsoft are playing is different from what Box offers, but here’s the new reality: Cloud storage without editing and collaboration tools is moot, as are editing and collaboration tools without cloud storage.

Microsoft just cut the fee for the proximal stored gigabyte to a titch over zero. So, storage itself can no longer be a differentiator. That’s tough for companies like Dropbox and Box that have long charged for storage.

Google and Yahoo have also helped lower the cost of storage. Yahoo offers a terabyte of storage on Flickr, and Google recently axed its prices for cloud storage to boot.

Dropbox and Box must move up the value stack, and are, to their credit, working hard to do so. But Microsoft doesn’t want to cede the space, as doing so would directly impugn its future Office cash flow. And that’s not something it wants to divest.