UPDATED 06:06 EDT / FEBRUARY 24 2015

I was wrong: Microsoft is still killing Dropbox

Verizon Cloud outageThis is the first time I’ve ever followed up a “looks like I was wrong” column with one saying “or maybe I was wrong about that.” Just the other day, I called back my position that Microsoft OneDrive would kill Dropbox, Box and the others.

I was wrong, however, and my original assessment that cloud storage is a feature, not a product stands. Cloud storage companies will have to provide big value-adds to prosper and whether they can do that is not clear. Microsoft, Google and Apple appear set to own cloud storage for the masses, with Microsoft clearly in the leading spot.

About regaining my senses: Today, I received a press release from the enterprise collaboration company harmon.ie that convinced me I had written too soon. Caught up, as I was, in the kumbaya of the Nadella administration’s willingness to work with others.

Here’s what I received:”With the recent announcements of MS offering 100GB to Dropbox users, it’s clear.  Microsoft is embarking on a clever ‘partner and conquer’ strategy that weans users of competitors’ storage solutions

“With the recent announcements of MS offering 100GB to Dropbox users, it’s clear.  Microsoft is embarking on a clever ‘partner and conquer’ strategy that weans users of competitors’ storage solutions off these solutions and onto OneDrive,” writes David Lavenda, Harmon.ie’s VP of Product Strategy.

“How? First partner with the storage vendors to allow them to open and edit Office documents stored anywhere in the cloud. Then, reach out to those users and offer them massive amounts of free storage for switching,” Lavenda wrote.

He adds that “the ‘partners’ really have nothing to retaliate with. Because they make their money on storage, giving it away is a losing proposition. MS can give it away because they make their money with Office.”

If you don’t believe this is happening, Microsoft helpfully provided a Tweet in support of Lavenda’s argument:

“Drop the box – move your photos, music, and docs to #OneDrive and get 100 GB for one year free  https://twitter.com/onedrive/status/568458706666397696

I got a similar offer from Office365 that earned me an extra 100GB for two years, not one, but what I will do with that extra space on top of the 1TB Microsoft already provides me isn’t clear.

“Long-term, I think this will be a struggle for the storage folks,” Lavenda writes. “Without their own Office apps to counter MS’s, it looks like a done deal. At the end of the day, file sync and storage isn’t a market; it’s  a feature of a cloud productivity suite.”

Lavenda declares this a “brilliant strategy” and he is right. This is Microsoft wrapping the lead pipe with something soft before hitting you with it.

I am reminded of a supposedly true Bill Gates story from early in Microsoft’s history. It’s about an occasion when Microsoft lost a $150,000 sale and someone remarked that it wasn’t such a big loss for the rapidly growing company.

“It’s not that we lost the $150,000, it’s that they got it,” Gates is supposed to have responded.

Microsoft owning cloud storage is so important to Office’s continued success that the company is essentially giving storage away. Meanwhile, competitors charge what by comparison seem like criminal prices for small amounts of storage.

Microsoft is losing money on cloud storage, it appears, in order to stop competitors from making money themselves and, perhaps, gaining traction with an Office competitor.

Compared to Google, which data mines peoples’ email and seemingly everything else, Microsoft is a clea player. It’s business model is not built on making money off people’s private information.

If Microsoft is willing to give away lots of storage to become our cloud provider, maybe it’s not a bad idea. If only OneDrive worked better.

photo credit: Anas Ahmad via photopin cc

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