Still More Free OneDrive Storage. Can Dropbox survive?

Microsoft OneDrive - more storage space, lower prices

This week Microsoft announced huge increases in the amount of free online storage space with each OneDrive account, and sharply reduced prices again for additional space. Synced online file storage is turning into a basic component of our devices, something that we expect instead of a premium feature that we pay for. Microsoft and Google (and soon Apple) have moved aggressively to improve their file syncing and lower prices as a way to keep you in their ecosystems.

Dropbox is starting to look like an anachronism. It has not significantly improved its service in years and it has kept its prices artificially high despite the price-cutting by its competitors. Dropbox is still popular but it looks like the last man standing in a commoditized and co-opted field.

(Suggestion for Dropbox users: start using OneDrive! It runs side-by-side with Dropbox – you don’t have to choose one or the other. They work equally well now. Become familiar with OneDrive and begin to move your files into it. At some point, you’ll be ready to make the transition. There are some tips here to help you get started, written back when the service was named Skydrive.)

If you have a long memory, this is familiar. Netscape and Firefox established devoted followings as independent web browsers, but Microsoft, Google and Apple steadily improved their browsers until most people stopped caring about the alternatives because the readily-available built-in choices were good enough. Netscape disappeared and Firefox is dropping out of sight quickly. Most of us use the browser that comes with our devices or fits our ecosystem and never think about the other choices.

Similarly, there was a thriving market for antivirus programs which has now all but disappeared. The free and unobtrusive Microsoft Security Essentials became the default choice for huge numbers of Windows 7 users, and Windows 8 provides malware protection at a very deep level, almost hidden from sight, as a basic service. The market has dried up for Norton, McAfee, and the rest.

Dropbox and similar services from Box, Adobe, and many others are in a similar position. File syncing and online storage works best when it is deeply integrated in our ecosystem of choice. OneDrive has undeniable advantages for business users now that Microsoft has interwoven it with the Office programs. Google has created its own integrated system with Google Apps and the rest of its services. There is little that Dropbox or the others can do to create a differentiated service that provides a compelling advantage over the integrated services.

Microsoft has improved the consumer version of OneDrive at a rapid clip this year. You can sync files with OneDrive on Windows, on Macs, and on every mobile phone and tablet – Windows, iOS, and Android. OneDrive is the only cross-platform service that can sync photos from any phone, regardless of OS. Sharing files and photos is easy. The web browser display is gorgeous, especially for shared photos. You can edit Office documents in full-featured web-based versions of Office programs – Word, Excel, Powerpoint, OneNote – or open them directly into your installed versions of those programs.

This week’s announcements should encourage you to put all of your data into OneDrive, rather than picking and choosing bits of it to avoid storage quotas.

Every Microsoft account will now start with 15Gb of free OneDrive storage space, more than double the previous amount. Microsoft claims it chose that amount because 75% of Windows users have less than 15Gb of data on their computers: all of the data can be stored online without separating it out.

Anyone with an Office 365 consumer subscription – Office 365 Personal or Home – now gets 1Tb of storage space. Those are the subscriptions that cover licenses for the Office programs on computers and tablets. It’s a no-brainer: for $99/year, you get licenses to install the Office programs on 5 computers and 5 tablets, and now you get 1Tb of storage space to go with it.

It has the potential to be more than that. An Office 365 Home subscription can be shared with other family members, and each one gets 1Tb of space in OneDrive.

Need more space? The best way to get more space is to buy the Office 365 Home subscription and get licenses for Office at the same time. But if you just want space, Microsoft dropped those prices as well. 100Gb of additional OneDrive storage is now only $24/year – a 70% drop from the old prices.

Microsoft has matched Google with the increased free space and lower prices for additional space. Both of them are making Dropbox look like a terrible deal. It charges five times that amount for extra storage space and it has not added any features to compensate for its lack of integration with Office and lackluster photo display. In fact, Dropbox’s most prominent news coverage in the last few months came after its tone-deaf appointment of former Secretary of State Condoleeza Rice to its board of directors, which inspired a widespread backlash. (Really, what were they thinking?)

At some point Dropbox will lower its prices and unveil some new features. It has been acquiring companies this year for mail, messaging, photo technology and more, and will try to regain some momentum with new announcements. I don’t expect any of it to matter. Microsoft, Google and Apple have taken over online file storage and the third parties are on a long slide to irrelevance.