Australian small and medium‑sized businesses that rely on OneDrive for Business as a standalone service will need to plan for change.
Microsoft has confirmed it will be retiring all standalone OneDrive for Business subscriptions. This will provide Microsoft with another major shift in how organisations can purchase Microsoft’s cloud storage services.
While OneDrive itself isn’t disappearing, the way Australian businesses can buy and license it is changing — with cost and licensing implications, particularly for Sydney‑based SMBs that use OneDrive primarily for file storage. Any small business that relies on OneDrive for Business Plan 1 or Plan 2 as a standalone product will need to change and purchase a higher subscription, typically a Microsoft 365 subscription.
What’s Actually Being Retired
Microsoft is phasing out the standalone versions/SKUs of:
- OneDrive for Business Plan 1
- OneDrive for Business Plan 2
- SharePoint Online Plan 1 and Plan 2
These plans have historically been popular with Australian SMB professionals as they offered large amounts of cloud storage at a low per‑user cost, all whilst requiring full Microsoft 365 licensing. Microsoft claims these plans have seen low demand compared to bundled offerings and have been used in “nonstandard” ways – widely interpreted as inexpensive cloud storage rather than full collaboration platforms, which is what its purpose was.
Key Dates for the end of OneDrive Business
Microsoft will take a a gradual, multi‑year approach to close these products:
- New purchases end: 31 May 2026
- Renewals stop: January 2027
- Service fully retired: December 2029
Existing Australian customers can continue using their current plans without interruption until the final retirement date. However, no new tenants or licences will be available after mid‑2026.
Why This Matters for Sydney & Australian SMBs
For many of PIPs Sydney IT clients, particularly smaller industries such as those in professional services, construction, architecture and consulting firms, OneDrive for Business has been used as a cheap backup location and document repository. these have primarily been used to supplement the PIP private cloud storage and PIP private hosting cloud. In this scenario, these clients have no need for additional apps, software, bells and whistles.
Unfortunately for these clients the forced move to Microsoft 365 means:
- Higher monthly licensing costs per user
- Paying for applications and services that may not be required
- A need to reassess storage, compliance, and backup strategies
Industry reporting suggests SMBs moving from standalone plans to Microsoft 365 could face significant cost increases, especially once upcoming Microsoft 365 price rises take effect in 2026 and beyond.
What This Means for Business Customers on OneDrive
If your organisation currently uses a standalone OneDrive for Business plan or multiple of these accounts, you will eventually be required to move to:
- Microsoft 365 Business plans
- Microsoft 365 E3 or E5
- PIP Private Cloud Storage
- Other third party storage providers
Of course for many small businesses, this represents a cost increase. Microsoft 365 bundles are over twice the costs and include apps and services many organisations don’t strictly need. These costs are also forever increasing every year as more companies and enterprises adopt the Microsoft 365 platform.
OneDrive Isn’t Going Away – It’s Being Bundled
It’s important to be clear: OneDrive for Business is not being shut down and you wont loose your data. The Microsoft 365 suites will remain the primary way to access OneDrive and SharePoint going forward, tightly integrated with security, compliance, and AI features like Copilot.
What Businesses Should Do Now
PIP is encouraging organisations and clients to start planning early for any clients on an IT managed service agreement, your PIP account manager will reach out and resolve this over the coming weeks. For all other clients:
- Review any current OneDrive and SharePoint licensing
- Identify any users pr global accounts that are on standalone plans
- Talk to PIP and compare what Microsoft 365 options that best fit actual usage
- Review backup and retention strategies (especially for regulated industries)
- Plan data migrations well before renewal deadlines as many long established legacy systems may not be compatible with the new authentication and authorisation systems.
With several years before final retirement, any business that is utilising this service and acts early will have the most flexibility and avoid rushed, expensive transitions.
Bottom Line
For Australian SMBs, this change isn’t about OneDrive disappearing as usual, it’s about choice disappearing. Standalone, low‑cost storage is being replaced by bundled productivity platforms. Any businesses that understand this early will have the best chance to control costs and avoid disruption, so speak with your PIP account manager today and organise the most cost effective transition for your sensitive data.
