[jhuckestein]

With a 25GB/user limit less than 1% of the users need more than 7GB of storage.

That sounds like an argument in favor of keeping the 25GB cap. Does Microsoft not trust their own data? Are they really allocating 25GB/user currently, do they need the revenue from the 1% that will now have to pay or what is going on?

[OzzyB]

Good point. The only thing I can think of is that they don't have to give too much for free -- they just have to give more than their competitors.

Dropbox gives 2gb for free, so 7gb from Microsoft is more than enough to be a competitive advantage.

Also, by not starting out at 25gb, Microsoft can slowly increase the free rate, as and when necessary, and generate lots of free press and happy users along the way as well.

Lastly, since Google's service hasn't launched yet, perhaps it's not prudent to get into an arms-race right off the bat.

[KeyBoardG]

This may be a result of some pressure for the online services division to start turning a profit as they are MS's largest money pit at the moment.