Update: Microsoft throws free OneDrive storage at consumers

Newest offer tries to tempt Dropbox's consumer customers to desert, head to OneDrive

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Microsoft has kicked off a free 100GB OneDrive upgrade to U.S. Dropbox users, tempting desertions from the rival storage service, a Microsoft partner since last November.

"No contradiction there," said Ezra Gottheil, an analyst with Technology Business Research about the appearance of just that. "These services are incredibly sticky, so the bigger [the amount of storage in one's account] the stickier they are."

In early November, Microsoft and Dropbox struck a deal to integrate each company's corporate offerings -- Office 365 on Microsoft's part, Dropbox for Business on Dropbox's -- with the other's services. The two firms, which compete in the cloud storage and file sync market, have already collaborated on tablets and smartphones, and will expand the agreement to browser-based functionality this year.

The latest promotion, however, applies to OneDrive, Microsoft's consumer-grade service. Only U.S. residents are eligible.

OneDrive comes with 15GB of free storage -- as opposed to Dropbox's free 2GB -- but the new offer provides 100GB extra storage for one year, at which time users' accounts will revert to their original allotments. Users will then have to pay to add more files to the cloud service; existing files stored there will not be deleted.

100GB of storage normally costs $1.99 monthly, or $23.88 per year. Other options for more space include subscribing to Office 365 Home or Personal, the for-consumers, rent-not-buy plans that list for $6.99 per month (or $69.99 annually) and $9.99 per month ($99.99), respectively. Those plans provide an unlimited amount of OneDrive storage.

The free OneDrive offer does not apply to customers with OneDrive for Business, the storage service tied to corporate Office 365 subscriptions.

The free 100GB for Dropbox customers followed an earlier promotion that let U.S. users add 100GB for two years to their OneDrive accounts simply by logging into this website with their Microsoft account.

Gottheil drew a line between Microsoft's habit of handing out storage and Google's penchant for doing the same. "They're doing what they have to do to win the game," Gottheil said of Microsoft. "They do it to be familiar to consumers, to build the brand, to build scale."

By targeting Dropbox, whose user rolls are dominated by consumers, Microsoft is trying to back the competitor into a corner, said Gottheil. "Dropbox built its business on the individual user, so they'll have to find a way to redefine themselves," he said.

But while that hard-nosed strategy would have fit perfectly within the regime of former CEO Steve Ballmer, Gottheil saw other OneDrive moves as indicative of the new mindset under current CEO Satya Nadella.

For example, earlier this week Microsoft updated its Office apps for the iPad and iPhone to support Apple's iCloud storage service and announced a broader initiative, the Cloud Storage Partner Program, that has Box, Citrix and Salesforce working to integrate their cloud services with Office Online, the Web-based versions of Excel, PowerPoint and Word.

"Microsoft is saying that it's going to be agnostic about storage services, and that it's going to win by becoming the best in integrating with their products," said Gottheil. "And really, what's their choice? That's what customers are looking for."

Dropbox users who want the extra 100GB of OneDrive storage must log in with their Microsoft account, click this link, then verify that they have a Dropbox account. Consumers must also agree to receive promotional emails at the address used for their Microsoft account.

OneDrive Dropbox offer

Microsoft's trying to steal Dropbox's consumer customers with a free 100GB bump in OneDrive storage.

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