Microsoft Drops Unlimited OneDrive Storage After People Start Using It For...Unlimited Storage

You'd think those darned consumers would know better than to actually believe that unlimited offers were meant to be unlimited. What nerve...JL

Peter Bright reports in ars technica:

It turns out that if you offer unlimited storage to people, a few of them actually take you at your word and trust that you are truly offering unlimited storage, and then they start using it.
A little over a year ago, Microsoft announced that paid Office 365 Home and Personal subscribers would get, as part of their subscription, unlimited cloud storage on its OneDrive service. (Last week) the company announced that it wasn't going to do that after all. It turns out that if you offer unlimited storage to people, a few of them actually take you at your word and trust that you are truly offering unlimited storage, and then they start using it.
Explaining the backtracking, the new blog post complains that a small number of paying customers were using OneDrive to store backups of multiple PCs and large collections of movies and TV shows. Some of these outliers used more than 75TB of space, which Microsoft says is 14,000 times the average (putting the average OneDrive user at about 5.5GB).
Instead, paid users will now receive only 1TB of storage, a reversion to the service's previous limit. The company is also removing its old 100GB and 200GB paid plans, replacing them with a 50GB plan at $1.99 a month. Free OneDrive storage is also being cut early next year, from 15GB to 5GB, and there's no more 15GB bonus for storing your camera roll in OneDrive. Going forward, OneDrive users with more than 1TB of data will have a one year grace period during which they can keep their large storage, after which they must cut back to below 1TB. Similarly, free users with more than 5GB of data will have a year after the change is made to reduce their usage to below the 5GB level.
Paying users not happy at the reduction in storage will be offered pro-rated refunds.
Although this was announced yesterday, we have had occasional reports over the last few months from paying Office 365 subscribers telling us that their OneDrive accounts were capped at 1TB. According to these users, customer service reps were telling them there was no unlimited storage and that 1TB was the limit. As such, it looks as if this change may have been in effect for some time prior to the decision to go public.
This change is frankly rather alarming. That people were using its unlimited storage service for unlimited storage has apparently caught Microsoft off guard. Even though this is a problem that virtually every "unlimited" product suffers—for example, the Verizon FiOS "unlimited" customer using 77TB of bandwidth a month or every mobile operator throttling its heaviest "unlimited" users—it appears that Microsoft did not take occasional heavy users into account when making its offer, and so it has decided to kill it off.
This comes as Microsoft has made it easier than ever to use lots of OneDrive storage; Groove Music knows how to play music stored on OneDrive, so it's worth uploading all your songs to Microsoft's cloud so that you can play them from anywhere.
Cloud backup provider Backblaze, whom we've written about a number of times over the years, offers unlimited backup storage for $5 per month. The company tells us that it does so profitably. Yes, occasionally some users use many more times the average. 75TB users certainly aren't going to be profitable for Microsoft; even before redundancy and replication is taken into account, that's around $1,800 of raw disk capacity, and a subscriber paying $70 a year isn't going to come anywhere close to covering that cost. But if Backblaze's accountants and engineers can provide cost-effective storage on an unlimited basis that can accommodate rare extremely heavy users, it makes one wonder why Microsoft cannot—and why the company apparently didn't check the viability of offering unlimited storage before the offer was made, rather than after.
This isn't the only way that Microsoft has made OneDrive less attractive over the last few months, either. In Windows 8.1, the integrated OneDrive client was really quite clever, using local "placeholder" files to represent data that was available in the cloud but not yet downloaded locally. Opening these files from Explorer or most applications would cause the download to occur automatically, enabling the cloud storage to act as a kind of seamless extension of local storage.
The system wasn't perfect, with some issues around making the behavior clear and some compatibility limitations. These problems were not insurmountable, but instead of fixing them, Microsoft simply ditched the entire concept in Windows 10. The Windows 10 OneDrive client reverts to the same kind of syncing behavior as is used by, for example, Dropbox, requiring much more manual management of what gets synced and what doesn't.
The company has made vague promises to produce an updated OneDrive client that improves the sync experience, but as things stand right now, using OneDrive in Windows 10 is markedly worse than using it in Windows 8.1. Dropping the unlimited storage similarly makes it worse. And killing off the camera roll extension means that one of the most widely applicable paths into using OneDrive for one's cloud storage needs is gone. Does Microsoft even want us to use OneDrive anymore?
If it were any other service, we'd almost feel suspicious that the poor management and reduction in capabilities were precursors to winding the entire thing up. OneDrive is too important to Windows and Office 365 for that to be in the cards, but it nonetheless makes us wonder why this core service appears to be getting worse and why the company is willing to undermine the trust people had in the service by changing the terms of its service in a way that has no benefits, only downsides. This doesn't just reflect badly on OneDrive. It reflects badly on Microsoft's entire position as a provider of cloud services: it calls into question Microsoft's ability to deliver what it said it would deliver.