Microsoft limits unlimited OneDrive for Business storage to priciest Office 365 enterprise plans

No surprise, says analyst, after the elimination of unlimited storage for consumers


Microsoft yesterday announced that only the priciest enterprise Office 365 subscription plans will be eligible for an unlimited OneDrive for Business storage allotment.

Coming on the heels of a decision last month to scrub unlimited storage from all consumer-grade Office 365 plans, Microsoft's latest move was no shock to Wes Miller, an analyst with Directions on Microsoft.

"Am I disappointed? Yes. Am I surprised? No," said Miller in a Wednesday interview.

Microsoft acknowledged the disappointment Miller mentioned.

"We ... recognize we are disappointing customers who expected unlimited storage across every Office 365 plan, and I want to apologize for not meeting your expectations," said Jeff Teper, Microsoft's top OneDrive executive, in a post to a company blog yesterday.

Previously, Microsoft had said that all Office 365 customers would have a never-ending supply of storage in OneDrive for Business, the service for commercial customers. As of Thursday, the firm's roadmap for the subscription service still states, "Moving forward, all Office 365 customers will get unlimited OneDrive storage at no additional cost [emphasis added."

Microsoft significantly revised that on Wednesday.

Only the most expensive Office 365 plans -- Enterprise E3, the to-be-retired Enterprise E4, and the new Enterprise E5 plans -- will offer unlimited storage if more than five users are on the plan. And then only in stages, with each increase requiring Microsoft's approval.

Between now and March, Microsoft will increase the storage allowance for customers on those plans -- as well as the corresponding ones for government customers and education -- from the current 1TB to 5TB. After that, companies and organizations that want more will have to ask for it.

"After this [5TB] point, customers who want additional storage can request it as needed by contacting Microsoft support," said Teper. He provided no details on how the extra space would be allocated, but Miller said he expected it would be in discrete allotments, perhaps 5TB at a time.

Office 365 Enterprise E3 lists at $20 per user per month (or $240 annually), while E5 -- which replaces E4, with the latter set to fall off the catalog by June 2016 -- runs $35 per user per month ($420 annually). Less expensive plans, including the $12.50 per user per month ($150 annually) Business Premium, will have a 1TB cap on OneDrive for Business.

Teper did not offer an explanation for the backtrack from unlimited for all plans, but a recent Microsoft message to consumers who subscribe to Office 365 Personal or Office 365 Home may provide a clue. "We made a business decision to reduce storage limits for OneDrive," said Douglas Pearce, a group program manager for OneDrive, in a post to Microsoft's petition-like UserVoice last week as he, like Teper, apologized for the poor way the changes were communicated.

"If you allocate unlimited storage, you have to hold it available," said Directions' Miller. "You can promise unlimited, but when everyone uploads terabytes, the walls would explode."

Miller said that Microsoft "learned a lot over the last year about how people stored stuff," then decided it had to gate, or cap, the storage allowances.

He also characterized the limitations as, if not business as usual, not extraordinary either. "When they announce a feature on a roadmap, the inclination is to see it as everyone gets it," said Miller, who cited the new Planner app. But it's not unusual for Microsoft to later restrict a feature or app, including one for Office 365 customers, to a subset of customers as it nears an actual release, he argued. "This 'packaging' is the last thing we hear about," Miller said.

Planner, for instance, will not be available to consumer-grade Office 365 plans, nor the $8.25 per user per month ($99 annually) Office 365 Business plan.

Talking again of the OneDrive for Business allowances, Miller also contended that the E3 plan is a better deal for most companies than Business Essentials. The latter will have a 1TB maximum, the former will not. E3 offers significantly more features than does Business Essentials, but it's $7.50 more per user per month (or $90 more per user annually).

Naturally, Microsoft would love if Business Essentials users upgraded to E3 to get, among other things, more OneDrive space, as the company would see a 60% revenue jump from those customers.

Microsoft has made other moves recently to boost revenue from Office, including a 59% price increase in the top-tier enterprise-grade plan.

Office 365 roadmap

Microsoft hasn't gotten around to changing the Office 365 roadmap, which continues to promise unlimited OneDrive and OneDrive for Business storage space.

Copyright © 2015 IDG Communications, Inc.

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