Microsoft Lowers Cloud Storage Prices in Time to Catch Ubuntu One Users

Microsoft (NASDAQ: MSFT  ) has increased its OneDrive free storage allocation from 7GB to 15 GB, and lowered the price for its 100GB plan to match Google's (NASDAQ: GOOG  )   (NASDAQ: GOOGL  ) Drive. This service plan is aimed at OneDrive users who have not subscribed to Office 365. Microsoft and Google now have the largest free allocations for cloud storage services.

It's probably not a coincidence that Microsoft pulled off this move at this time. It could very well be that the giant software maker has its eyes set on Ubuntu One cloud users. Ubuntu One was officially shut down on June 1, 2014, with all user data scheduled to be deleted on July 31, 2014.

Ubuntu One wrote in a blog to its users that the huge free allocations by services such as Google Drive had made it unfeasible for it to continue operating competitively. Interestingly, Linux offered up Google Drive as a top cloud storage alternative where Ubuntu One users could migrate their data.

Microsoft also increased the free storage allotment for Office 365 Home users from 20GB to 1TB.

Cloud Drive

Service Plan

Apple iCloud Drive

Free 5GB

20GB--$0.99/month

200GB--$4/month

Google Drive

Free 15GB

100GB--$1.99/month

1TB--$9.99/month

Dropbox

Free 2GB

100GB--$9.99 per month

200GB-$19.99/month

Microsoft One Drive

Previously Free 7GB

Now -Free 15GB

100 GB

Previously -$7.49/month

Now--$1.99/month

200GB

Previously -$11.99/month

Now--$3.99/month

Box

Free 2GB

100GB--$5 monthly

Unlimited--$15/month

Source: Ubuntu

Google Drive still wins, for now
Ubuntu One users can migrate their data to Google Drive using a robust native client for Linux from a company called Insync. But, it's not clear how these users can migrate their data directly to OneDrive. However, it's quite possible to transfer data from one cloud drive to another using other means. The ease of transfer to Google Drive might, however, mean that Google Drive wins, for now.

By lowering the prices of its OneDrive lower-priced tiers, Microsoft has positioned itself as a highly competitive cloud drive for new users, as well as existing cloud users who might want to move to OneDrive. After all, it's quite easy to migrate data from Google Drive to OneDrive.

In case you are wondering how Microsoft decided on 15GB instead of, say, 10GB or 20GB free allocation, the company has said that it used its own telemetry that showed 75% of OneDrive users have 15 GB of data or less (though it appears as if the price cuts were aimed at matching Google Drive's prices more than anything else).

Last May, Microsoft announced that 250 million people were using its cloud drive (formerly called SkyDrive). There has been no official statement from the company about this year's figures. But, judging by the fast 150% year-over-year growth of Microsoft Azure, SkyDrive users could have hit anywhere between 350 million-400 million by now, which means that there could be as many as 87 million paying OneDrive users.

Assuming 80% of these users fall in the 100 GB price tier, and the rest fall in the 200GB tier, Microsoft could fetch as much as $2.5 billion, or about 3.5% of its overall revenue, from OneDrive in fiscal 2014, which ends on June 30.

What about Google Drive?
Google Drive had 120 million users as of the end of 2013, which is almost one-and-a-half years since its launch. That's impressive growth. The fact that the service is so competitively priced is probably one of the reasons its user base is growing so fast. In comparison, Dropbox, launched in 2007, had 175 million users by the end of 2013.

Google does not provide a breakdown of its Google Drive figures that shows how many users are paying customers. Assuming that it's structured similarly to OneDrive, then approximately 25%, or 30 million, of Google Drive users are paying customers. If 80% of these users fall into the 100 GB tier, and the rest mainly fall into the 1TB tier, Google could see revenue of $2 billion, or 3.5% of its overall revenue.

Regarding the number of Ubuntu One users who might join Google Drive, it's difficult to estimate the number of Ubuntu One users. Using the market share of Linux desktop OS (1.62%) can be misleading because a study done by Ubuntu two years ago revealed a great degree of overlap between Ubuntu and other operating systems.

Approximately 76% of Ubuntu users were also Windows users, while 51.3% also used Android. Moreover, Ubuntu One offered 5GB of free storage space, compared to Dropbox's 2GB. Dropbox works great with nearly every other cloud storage, and it's relatively easy to shift data to/from Ubuntu One and the cloud drive.

Source: Ubuntu

Ubuntu One could, therefore, have tens of millions of users, possibly more than 100 million. Google Drive could soon see a huge influx of Ubuntu One users and a large boost for its Google Drive user base.

Foolish bottom line
Cloud revenue is quickly becoming an important revenue source for companies such as Microsoft and Google. Intense competition in the space is leading to falling cloud prices and better offers, which is great for customers, and good for revenue growth for the providers.

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Read/Post Comments (7) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On June 26, 2014, at 3:58 PM, neonspark wrote:

    this article is not accurate:

    office 365 is not $9.99 per month for 1TB. IT is 6.99 per month, thus beating google's offering.

    http://office.microsoft.com/en-us/products/buy-office-365-pe...

    The family plan for office 365 is 9.99/month but gives 5 users 1TB each (5TB total). which also beats google.

    http://office.microsoft.com/en-us/office365home/

    these are off course non business plans.

    source.

    on the platform side, onedrive has an open SDK and several linux apps exists. google drive also doesn't do a good job supporting non google platforms and there isn't a windows 8 or windows phone app since google has basically told windows 8 and probably 9 users to go kill themselves instead of going where their customers are. This childish stance from google brings into question who they put first, their hate for MSFT or their customers. Right now, hate for MSFT tends to win at google. While that doesn't affect the linux user, when picking cloud solutions you want a company that doesn't play favorites, google does. And if you work in an enterprise environment, you'll encounter windows at some point meaning google doesn't want to deal with you then.

  • Report this Comment On June 26, 2014, at 6:55 PM, mcgeea wrote:

    I find myself sceptical that OneDrive will ever grab a significant share of Ubuntu One migrators. Linux desktop users (as opposed to just Linux server users) are culturally obstinate and anti-Microsoft, and the company is demonized by the self-styled "FOSS" community.

    On the other hand, Google has always embraced open source and culturally the company and their offerings simply mesh much better against Linux desktop users, in spite of some of its infractions against the dwindling "Free Software" faction of the FOSS movement.

    Microsoft may be a bit late to the party as well, as the announcement by Canonical pressing everyone to find other cloud services was made months ago.

  • Report this Comment On June 27, 2014, at 8:44 AM, ricegf wrote:

    I used Ubuntu One since its inception, and was disappointed to see it close.

    I'm now an Insync Pro subscriber (they provide great customer service, by the way!) to leverage the free 100 GB Google Drive that came with my Acer C720P Chromebook (great little device!).

    Migrating my data was actually quite simple. Ubuntu One synced my cloud data to a directory on my primary workstation's disk, and then Insync synced that directory to my Google Drive account.

    Not as fast as a direct migration, but since the computer did all the work, all it took was some time and bandwidth. Recommended!

  • Report this Comment On June 30, 2014, at 3:14 AM, Paul777 wrote:

    Its great MS is adding so much value. Efficiency & productivity being passed on as cost saving to users.

    Your tabular columns makes comparisons very easy.

    My favorite cloud storage (use almost all compared above & had used Ubuntu 1 as well) is Dropbox. I think its integrated the best with Ubuntu, Windows, Android etc. For the others, I need to use a web browser, however, for Dropbox I could use it directly from the Ubuntu File Browser as well.

  • Report this Comment On July 03, 2014, at 11:39 AM, cineworks wrote:

    Was the June 23 pricing announcement by MS just a hollow promise?

    It doesn't appear that the pricing structure described above has gone into effect. As of July 3, the old, high prices are still being offered on the MS website.

    A quick Google search shows plenty of links to the June 23 OneDrive Blog post announcing the lower prices. But I didn't see an article noting the pricing postponement.

    Seems like a good idea for a MF story.

  • Report this Comment On July 07, 2014, at 7:45 AM, DolceTran wrote:

    Hi cineworks. MS promised to effect the price cuts in July, though it didn't specify the date. You can get the details here:

    https://blog.onedrive.com/new-onedrive-storage-plans/

  • Report this Comment On July 08, 2014, at 7:15 PM, cineworks wrote:

    Thanks for the clarification DT.

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