Microsoft is overhauling its OneDrive storage options today, and taking aim at its big competitors. While a Microsoft account has always offered 7GB of OneDrive storage, that is more than doubling to 15GB this week, a figure that matches Google’s own free Drive storage. New and existing Outlook.com users will all benefit from the increased storage, but Microsoft is making even bigger storage tweaks for its Office 365 customers.

"Anyone can do storage."

All versions of Office 365, Microsoft’s subscription version of Office, will now come with 1TB of OneDrive space. That’s a huge increase from the previous 20GB offering, and for Office 365 Home subscribers that means 1TB per person (up to five family members) for $9.99 a month. Office 365 Personal, priced at $6.99 per month, now comes with 1TB of OneDrive storage for one person, and access to the Office suite of applications. "Anyone can do storage," explains Microsoft’s head of OneDrive product management Angus Logan. "When you think of bringing in the productivity … that’s just something that Microsoft alone can deliver. No other company can deliver that."

But there’s one other company that has been delivering productivity web apps and cloud storage over the past few years: Google. It’s clear Microsoft is taking aim directly at Google, while also widening the storage gap with Dropbox and others. Google comes closest to matching Microsoft’s powerful Office suite with free online alternatives, but web apps can only go so far right now. "When you think about productivity or authoring, Google is kind of the closest in terms of that, but I still think they’re far away," notes Logan.

Microsoft matches Google in the key cloud storage areas

Google has always had a price advantage over OneDrive, but Microsoft is also matching that for those who don’t want to opt for an Office 365 subscription. 100GB of OneDrive storage is now priced at $1.99 a month (previously $7.49), and 200GB has been reduced to $3.99 a month instead of $11.49. The new prices fall inline with Google’s alternatives, but the Office 365 subscription is clearly the best option if you need 1TB of cloud storage. At just $6.99 per month for a single Office 365 Home subscription, it compares favorably against Google’s $9.99 per month pricing for 1TB of storage and you get the added benefit of full Office apps on PC, Mac, and mobile.

"We don’t really think of this as a storage price war," explains Logan. "What we’re actually thinking about is a productivity war." That productivity war is being largely fought between Google and Microsoft, with Box offering some alternatives and Dropbox largely focused on storage. Today’s pricing adjustments edge Microsoft slightly ahead to those who value its Office suite of applications, and in a world of cloud storage options that could be an important differentiator.