Microsoft reverses course on OneDrive, restores 15GB free tier

By Joel Hruska

Last month, Microsoft announced a number of unpopular changes to its cloud storage service, OneDrive: The unlimited storage plan offered to Office 365 Home, Personal, and University customers was reduced to 1TB; the 100GB and 200GB plans were eliminated, to be replaced by a 50GB plan; the free storage plan was slashed from 15GB down to 5GB; and the company declared it would no longer offer a 15GB bonus to customers who synched their camera rolls with OneDrive servers.

Customers were anything but happy about these changes, and Microsoft appears to have gotten the message, at least in part. A Microsoft spokesperson has apologized for the way the previous change was communicated, stating:

“We realize the announcement came across as blaming customers for using our product. For this, we are truly sorry and would like to apologize to the community. While we are not changing our overall plans, we’d like to clarify what we are doing for customers impacted by the changes and share a new offer which we hope will go a long way in making the situation better for our biggest fans.”

First, the 1TB limit on the old unlimited accounts will still apply, though users with more than 1TB of storage online will have a 12-month grace period to migrate it to different services or upgrade their plans. Customers not happy about this can ask for a full refund on the service. Free accounts, similarly, are still being trimmed to 5GB.

Microsoft is making two changes to its previous strategy. One, existing OneDrive customers now have the option to opt-in and keep their previous 15GB of storage + 15GB camera roll (if previously applicable). Current users can opt into this plan starting now and running until the end of January. Two, existing free users with more than 5GB of data on OneDrive will receive a free year of Office 365 Personal. Microsoft claims it will email customers about this offer early next year.

It’s interesting to note the difference between these two approaches. If you want to keep your 15GB to 30GB storage locker, you have to opt into doing so — which means the vast majority of people will never notice the offer. Microsoft is certainly aware of this. When it comes to giving away Office 365 Personal, however, the company is going to be proactive and reach out to users to tell them the offer is on the table. This offer will also come with the 1TB of online storage normally provided.

As a long-run strategy, this makes perfect sense, since getting more people to use Office 365 may mean more long-term revenue for the company. It’s telling, however, that Microsoft would rather give away a free year of a product it sells for $70 (and up to 1TB of storage) than provide free OneDrive users with an extra 10GB of data apiece.

Put differently: If Backblaze can run an entire business on providing actually unlimited storage to users for just $5 per month, how much cash can Microsoft possibly be saving by cutting free users to 5GB? If you previously used between 5-15GB of storage on OneDrive, how many people are going to pay $70 per year for the privilege of 1-10GB of additional cloud storage per month?