Free Online Storage a Thing of the Past?

Online storage companies, which have been luring millions of consumers to their sites primarily through free services such as faxing and file sharing, are now changing their business models to help shore up their bottom lines.

Some main online storage players such as Xdrive Technologies Inc., FreeDrive Inc., My Docs Online Inc., I-drive.com and Driveway Corp. have been targeting new services at corporations with heavy-duty mobile users, as well as licensing their proprietary file-sharing software to businesses.

In addition, many are starting to charge for online storage for the first time as well as building partnerships with companies such as Access Co. Ltd., Electronic Data Systems Corp. and Nextel Communications Inc.

“I think everybody thought that online storage was a good idea. But I dont think anybody was quite sure what the business model would eventually be,” said Karl Klessing, Xdrives executive vice president.

Xdrive, with 9.5 million users, announced this week it will charge a $4.95 subscription fee for the use of 25MB of online storage. Up to now, the Santa Monica, Calif., company had made 25MB free.

For its part, FreeDrive, of Chicago, with 14.5 million users, earlier this month introduced a minimum subscription-based online storage service priced at $4.95 per month for 65MB of storage space, 365 downloads per day and some access to file-sharing functions.

It still offers 20MB for free storage to users.

Robert Emanuel, manager of applications development at United Airlines, in Long Beach, Calif., said he has no problem paying a subscription price for online storage.

United has licensed Xdrives customized application, which its business groups use to store files. Uniteds employees now use the service to share huge files when traveling internationally.

My Docs Online, which used to offer 20MB of storage for free, last quarter started charging an annual fee of $24.95 for 50MB.

In addition to all this, companies including I-drive, of San Francisco, and My Docs Online, of Naples, Fla., are developing services that give corporate employees access to online storage via cell phones, personal digital assistants and BlackBerry e-mail devices from Research In Motion Ltd.

I-drive, which has more than 9 million registered users for online storage, still offers 50MB for free. But last week, the company announced a partnership with Access to jointly develop applications for remote storage access via mobile phones and non-PC devices.