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Microsoft turns cloud storage into Office 365 feature

Gregg Keizer | June 26, 2014
But will the free 1TB boost subscriptions?

Rubin, however, acknowledged that Microsoft didn't care what motivated people into subscribing to Office 365, only that they did so. "They may be able to get more people paying for the productivity suite, even if they're not consciously paying for the applications, even if [the applications] are not motivating them," Rubin said.

But not everyone viewed the massive storage space expansion as trivial to Office 365's future success.

"In totality, the Microsoft deal is really, really good. Even exceptional," said Patrick Moorhead, principal analyst with Moor Insights & Strategy. "There's a storage battle going on, and people keep anteing up on the space, pushing more chips onto the table. That will pull in customers [to Office 365], and if the competitive disparity keeps going, could be a really big deal for both consumers and small businesses."

Microsoft's prime competitor in the office productivity space has been Google, with its $50 per user per year Google Apps for Business and the free personal use-only Google Docs, but Moorhead viewed Microsoft's 1TB give-away as less a strike against Google as one directed at Dropbox and Box, a pair of relative newcomers that based their models on cloud storage and synchronization, but have been adding document creation and document editing features and tools to make their offerings more than just storage.

"Box and Dropbox have been trying to make storage a product, make it 'sticky,'" said Moorhead. "But cloud storage is a feature, not a product."

Moorhead saw the logic of those who claimed the Office applications were now "free" to consumers, discounted to business, when the terabyte of storage was factored into the equation. "That's being proactive against Dropbox and Box," he said. "Those companies are trying to build apps to connect to their storage."

Microsoft already has those applications, he noted.

"Office 365 Home gives you the whole Office for five people, with 1TB of storage each. That will make it a really tough, tough choice to think about using anything else."

The ballooning of storage space -- a general trend as costs commoditize and for large providers, approach zero -- also will benefit Microsoft in ways beyond boosting Office 365's value and perhaps its subscriber base, the experts contended.

"What's more telling about this, I think, is seeing in it a shift to where the user is the hub," said Directions' Miller, referring to the per-user assignment of storage. That's a change from Microsoft's historic stance, where the device, in particular the personal computer, was the center of its universe, and the organization, as it managed those devices, controlled them.

Rubin looked at it differently. "This not only helps cement the value of Office 365, but helps bring them onto mobile platforms," said Rubin. Because the terabyte of storage can be shared across multiple devices owned by an individual, it could promote Microsoft software use on tablets and smartphones, he asserted, including Office for iPad, the scaled-down, touch-enabled suit the company launched in late March.


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