Microsoft's Game Changer: Cloud Storage is Now a Feature, Not a Service

Microsoft's Game Changer: Cloud Storage is Now a Feature, Not a Service

Game, set, match

Microsoft this week announced plans to provide all Office 365 subscribers—consumers and business users—with unlimited OneDrive storage. The switchover will occur over the coming months—subscribers currently get 1 TB of storage with both OneDrive (consumer) and OneDrive for Business—but it has already altered the cloud storage landscape permanently. With this change, cloud storage is no longer viable as a standalone service. Now, it's a perk, or feature, of other products or services.

I wrote about this change yesterday in An Offer You Can't Refuse? All Office 365 Subscribers Will Get Unlimited OneDrive Storage. There, I noted that it was "Game Over for Dropbox and the storage pretenders," which triggered a bunch of knee-jerk reactions in comments and on Twitter. But it's not possible to overstate this: Microsoft just moved the ball. Cloud storage isn't a service, something you pay for anymore. Now it's a feature. It's something you get for free as part of purchasing something far less nebulous.

So let me reiterate: It's Game Over for Dropbox and the storage pretenders. That market—for paid cloud storage from smaller vendors—has run its course. It's over. It's dead, Jim.

Yes, the doubters will quickly butt in with overly specific things that Dropbox (or whatever) does that OneDrive doesn't—the ability to share files from Explorer, the ability to see shared files in Explorer, and so on—and that's as cute as it is predictable. And temporary. And, more important, irrelevant to the people who are paying this fees en masse. Paid cloud storage for the masses is dead. And now the cloud's biggest players—Amazon, Google and Microsoft—can simply move on to doing what it is that they do best: Getting consumers and businesses to pay for products and services that are truly differentiated and not a commodity.

For Microsoft, of course, this means Office 365, the linchpin of its strategy to migrate from its past as a provider of traditional PC software to its future as a provider of cloud services that can be accessed via any popular mobile platform or the web. But the truth is that Office 365—unlike, say, Google Apps—is a hybrid solution. It combines best-in-breed client software—full Office on Windows PCs, of course, but also Office for Mac, Office for iPad, Office Mobile on handsets and, soon, Office for Android Tablets and Office Touch for Windows—with best-in-breed cloud services.

This is an offering Google and other competitors can't match, because these firms don't have the decades-long history of creating great client software. Google's offerings can be good, even good enough. But they'll never be superior. And by putting the focus on the part of Microsoft's stack that is essentially unassailable, the firm is wisely moving the ball, as I noted earlier, to a scenario that makes more sense, both for it and for its customers.

Cloud storage is now a commodity. Any firm—even relatively small firms—can sell—or resell—cloud storage. But only a handful of firms can make cloud storage available in unlimited quantities when you pay for another non-commodity, high-value product or service. For Microsoft, that product is Office. So while Google, say, may choose to offer unlimited storage for Google Apps customers, they're still stuck using Google Apps. They don't get full Office, or Office for iPad, or those other offerings.

Google can bulk up its mobile apps, and it has. But for the customers that matter—the enterprise and other larger businesses that are responsible for 70+ percent of Microsoft's revenues—there is no viable alternative to Office. And there never will be.

The only question I have about this change is why it took so long. Microsoft has spent the past year increasing the storage allotments on both OneDrive and OneDrive for Business, and otherwise improving the services and their integration with other parts of Office 365. And more is coming, including of course the answers to the criticisms of the Dropbox holdouts.

But it's already over. Here's the math.

In the coming days, any individual can get unlimited cloud storage—unlimited­—for $69 a year through Office 365 Personal. And of course you gain access to full Office for Windows, Office for iPad, and all the other wonderful Office 365 perks. Families can get the same deal for up to four users for $99 a year. And of course educational institutions, businesses of all sizes, governments, whatever, are all coming on board as well at a variety of price points.

If you were wondering how Office would navigate this "mobile first, cloud first" world of the future, wonder no more. This is how.

TAGS: Office 365
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