Microsoft offers unlimited OneDrive storage with Office 365 subscriptions

The downward spiral of pricing for cloud-based storage just took another steep plunge with Microsoft’s announcement today that all Office 365 subscribers will get unlimited OneDrive storage as part of the subscription.

That’s an increase from the 1 TB allowance Microsoft announced only four months ago for Office subscribers. It also comes on the heels of another change, in September, that removed the 2 GB file size limit for OneDrive uploads. The maximum size is now 10 GB. 

Prices for consumer Office 365 subscriptions start at $6.99 per month ($69.99 per year), and business subscriptions are as low as $100 a year. All of those offerings include the full set of Office desktop programs as well as rights to run Office on mobile devices such as the iPad. The $100-a-year Office Home subscription is good for up to five people in a household, who each now get a terabyte of storage and will presumably get upgraded to unlimited. A newly added Office 365 Business Essentials plan includes the full OneDrive for Business allotment for $60 per year, with a single Exchange Online mailbox but without the Office desktop and tablet programs.

This is just the latest salvo in the cloud price wars.

Last March, Google cut the price of a terabyte of Google Drive space to $10 per month. Apple’s new iCloud Drive offers 200 GB of storage for $4 a month (the same price per gigabyte as Google).

Meanwhile, Dropbox Pro and Dropbox for Business start at $10 and $15 per user per month (minimum five users for the Business offering). That price buys 1000 GB (1 TB) of storage. Office apps aren't included in that price.

Microsoft will continue to sell OneDrive space as a separate product, but the Office 365 Personal price is likely to be rock-bottom even if you never use the included Office apps. Redmond is no doubt hoping that the "unlimited" offer will accelerate Office 365 adoption. For the most recent quarter, Microsoft announced 7 million paid subscribers for the Office Home and Personal products.

Rollout of the new uncapped storage allotments starts today for Office 365 Home, Personal, and University customers. (Anyone can add their name to a waiting list by visiting this preview site.)

For Office 365 Small Business and Enterprise subscriptions, the unlimited storage option will begin rolling out in 2015.

Although the available storage space has no limit, there are other restrictions that could affect how much you can store in the cloud.

For consumer OneDrive accounts, which are tied to a free Microsoft account, the total available file count is 10 million files.

OneDrive for Business accounts, which are tied to Office 365 Small Business, Mid-Range Business, and Enterprise plans, are managed by an organization. Some file types are prohibited from uploading, and there is currently a limit of 20,000 items (folders and files), which imposes a severe practical constraint on the amount of data that an Office 365 subscriber can store.

(For more on the differences between the two OneDrive products, see “Office 365 subscribers now have access to 1 TB of OneDrive storage.”)

Today's move puts even more pressure on third-party cloud storage providers like Dropbox and Box, who are seeing their once-valuable product turned into a feature of other products.