Especially if you have a Microsoft SkyDrive, you need to read this article to keep your 25 GB of data.

Microsoft Kicks Off The Week…

Bracing for the announcements by Google, Microsoft reminded everyone that they were pioneers in cloud drive storage, and made the first round of announcements.

Microsoft announced late yesterday that they were making two major changes to SkyDrive. First, the company rolled out a major round of application upgrades and replacements. The changes are aimed at better competing with Dropbox, Box, and Google Drive. SkyDrive is now available for Windows Vista, Windows 7, Windows Phone 7.5, and OS X Lion. The app now functions similarly to Microsoft’s startup rivals, providing automatic on-device synchronization with the SkyDrive cloud store.

The upgrade also is designed to help phase out Windows Live Mesh, which will be not be continued on to Windows 8. Windows 8 will centralize around SkyDrive and Windows Live’s automatic account synchronization, built into Windows 8.

If you’re confused, you have a right to be. Microsoft rebranded Windows Live Mesh, Windows Live Sync, and SkyDrive around many times during each product’s lifecycle. Ultimately, Microsoft has taken the PC settings synchronization features from Live Mesh (and Live Sync), and built them into Windows 8. That feature will be known as Windows Live Account Synchronization. SkyDrive will now take the place of cloud storage synchronization. Direct, PC-to-PC synchronization of files will be phased out with Windows Live Mesh.

If this sounds like the same changes that Apple made in transitioning from MobileMe to iCloud, you also would be correct. Apple dropped the same Mac-to-Mac configuration synchronization features from MobileMe last year.

Storage Changes Require User Action

The final set of changes that Microsoft made surround storage space. Microsoft has reduced SkyDrive storage from 25 GB to 7 GB. This change, Microsoft notes, will impact less than 10% of SkyDrive’s existing userbase.

It’s painfully clear why Microsoft made this change. Windows 8 will push developers heavily to store files on SkyDrive, rather than on the user’s PC hard drives. With every Windows 8 account being offered to configure a SkyDrive for this purpose, Microsoft’s storage bill could become dramatic, even for a company the size of Microsoft. SkyDrive will arguably be used more as a primary storage device than even Apple’s iCloud is today.

Users that signed up to SkyDrive before today are being offered a chance to lock in their existing 25 GB storage pool. To do so, you must immediately log in to SkyDrive, and chose to lock in the 25 GB of storage with the banner that appears.

Microsoft also rolled out new storage price tiers that are cheaper than rival Dropbox. For example, 20 GB of additional storage is now only $4 per month.

Finally, Microsoft increased the per-file size limit to 300 MB on all accounts.

Google Shifts into Drive

Google today finally announced Google Drive. The sometimes-revealed, long-planned service will offer 5 GB of data per account. However, the service will exclude any document uploaded and stored in Google Docs from the storage quota. This means that Google Drive offers unlimited storage of certain files, any file type that can be converted to Google Docs can now enjoy limitless storage… albeit converted into Google-formatted data.

At the same time, Google has increased all Gmail and Google Apps free email accounts to 10 GB of storage. The service offered incremental storage which began at 5 GB, increasing every second thereafter. Google’s goal was to offer a storage rate that increased alongside the average email user’s increase in data. The new limits will put Google far ahead of Apple’s iCloud, which shares its 5 GB of free storage with Me.com email accounts.

For the user that embraces all Google services, free storage options tally far above the competition. Google nets you 10 GB of Gmail, 5 GB of Google Drive, and 25 GB of Google+ & Picasa photo storage. The downside? Having to use three or four (possibly up to five) different services/applications to manage and access all your files. Google Drive does not allow you to browse attachments from Gmail, and it does not allow you to browse your Google+ and Picasa Web Album photo stores as hierarchical files.

Finally on the Google front, if you were one of the few that upgraded their Gmail & Picasa storage, you’re in for a special bonus. Google is matching the storage increase from Gmail or Picasa that you bought, over on Google Drive. If you bought an extra 20 GB of storage on Gmail previously, for example, you now have 25 GB on Gmail, and an additional 25 GB of storage available on Google Drive.

Box & Dropbox Can Stay Relevant

Many have left Box out of their roundups and focused on Dropbox. Dropbox is used by more companies than Box, arguably, and arguably has a larger user base.

But Box has shown its ability to compete in terms of raw storage capacity. Apple iOS, HP TouchPad, LG Android, and Sony Ericsson Android have all at various times been able to lock in 25 or 50 GB of storage per account. While Box hasn’t released numbers, hundreds of thousands probably did lock in those offers for life.

Dropbox has excelled past Box in terms of on-device synchronization apps, and bests both Microsoft and Google with on-device applications. SkyDrive does not run on Android, nor does it work with earlier versions of Mac OS X (Microsoft did note that the Mac version of SkyDrive is in beta, and Apple’s current Xcode SDK does leave the door open for Snow Leopard support to emerge in the future – unclear if Microsoft plans to support it, however).

Apple’s iCloud likely doesn’t need to do much, if at all. With Photo Stream dynamically changing its size to accommodate other uses, there isn’t much pressure on Apple to increase storage. In fact, everyone seems to have responded to Apple’s numbers, rather than trying to best them. Hopes (fears) of Google offering 1 TB of storage per-user didn’t come to pass. Microsoft has cut their data down after finding it not to be a key differentiator. Even Box has yanked all their jump-through-hoop ways to lock in 50 GB of storage.

What You Need to Do

Obviously, if you have a SkyDrive account, the first thing you need to do is extend the storage pool to 25 GB, after logging in. Microsoft will likely pull the offer as soon as they can get some distance from the storage-reduction publicity. Even if you do not use SkyDrive regularly, the potential for it becoming a crucial storage option in Windows 8 make it worth the time.

Currently, Google Drive is open to all with a Google Account, but you have to request it to be activated on your account. We suspect this is likely a tool to throttle Google Drive uptake, in case of server overloads. So, you should then log in to Google Drive and activate it, to avoid being stuck in a queue (a la Google+ and Gmail before it).

Beyond those two steps, you really don’t need to take any actions right now. Google Drive and SkyDrive are both in day-zero waves, and their major improvements/rollouts will likely have issues. Our advice? Give it a week or two, then check out all the options, and see for yourself.

Updated at 12:55 PM Pacific with Google Drive bonus for customers that previously purchased storage quota increases on Gmail/Picasa.