Microsoft kicked off its own "productivity war" in June last year by doubling its free OneDrive storage and offering competitive pricing and 1TB of space for Office 365 subscribers. That storage, part of a monthly or annual subscription, then transformed into unlimited space late last year as Microsoft aggressively targeted Dropbox and Google to win over consumers and their storage needs. It all won Microsoft lots of new OneDrive customers and a lot of praise. Now that the bait and switch plan has worked, Microsoft is changing the rules of the game.
Technology companies usually pick Apple events to silently drop bad news, but if there's not one available then as late in the day as possible is always a good alternative. Microsoft chose 10PM ET last night to drop some big news, in a blog post, about the future of its OneDrive cloud storage service. Starting early next year, all new and existing free OneDrive storage will decrease from 15GB to 5GB. Microsoft is also removing the 15GB camera roll storage bonus for using OneDrive on iOS, Android, or Windows Phone. If you need to store more than 5GB then you'll need to start paying.
Microsoft really wants people to sign up for Office 365
It's clear Microsoft has miscalculated how much space OneDrive needs on average, and it's likely that the company isn't making its targets for switching users over to paid subscribers. Pushing the limits down will help. "These changes are needed to ensure that we can continue to deliver a collaborative, connected, and intelligent service," says Microsoft. The reality is more that Microsoft needs to start generating revenue from its consumer cloud activities and stop giving away thousands of GBs of storage. It was good to entice people in, but now it's time to pay. Microsoft really wants consumers to just opt for Office 365 subscriptions with OneDrive storage and Office software.
There's already a backlash against Microsoft's surprise announcement, and it's not a good look for the company given its impressive focus on mobile and the cloud. Microsoft is fighting a war against Amazon, Google, Salesforce, and many others for the business side of the cloud, but its consumer efforts are starting to look a lot more like Apple's iCloud offering. Apple offers the bare minimum of free storage and entices consumers to pay more for iCloud by making its apps and operating system make the most of the cloud. Microsoft is now bullying OneDrive users into paying for the free storage it is now taking away.
This isn't cloud first
If Microsoft sticks to this plan then people will simply switch to alternatives, and the company will lose the recommendations it needs for consumers to be willing to trust and pay for OneDrive. CEO Satya Nadella always says Microsoft's focus should be mobile first, cloud first. This decision isn't putting the cloud first for consumers at all.Verge Video: Satya Nadella's vision for Microsoft