When looking at the cloud storage market, you will see competition hotting up between various service providers. Software giant Microsoft has tweaked its cloud service - SkyDrive - and is offering tiered storage options. And, it could pose a threat to DropBox.

On Monday, Microsoft added some new features to SkyDrive. Users can drag and drop files of size up to 2GB on the drive directly. Previously, the file limit was set to 100MB. It also allows browsing and streaming files through any connected device along with a whole new set of features.

The upgraded SkyDrive is more like Dropbox (or even better). Allowing it to function as an extension of desktop browser, Microsoft has integrated SkyDrive into Apple Finder and Windows Explorer. Another clever addition is the ability to access all your files stored on hard disk from a Windows Phone and even an iPhone. Ensuring the safety, accessing files through skydrive.com will require users to pass from 2-step authentication process.

"As we set upon the path to bring SkyDrive closer to Windows, we had a few goals that drove our plan. First, we wanted you to be able to 'get up and running' as quickly as possible, with very few steps.

Secondly, we wanted to 'be quiet' on the system and make sure that all processing was entirely in the background, with your needs and your apps as the first priority. And third, we really wanted it all to 'just work' as you'd expect it to, staying up-to-date automatically, and humming along without confusing dialogs or pop-ups," said Mike Torres and Omar Shahine, who work as group program managers for SkyDrive.

Unfortunately, Microsoft is also taking it back with another hand what it gave with the first one. While upgrading its cloud platform, Microsoft has cut down the free online storage limit to 7GB from 25GB. Previously registered users, who have uploaded any file to SkyDrive before Sunday April 22, will still have access to 25GB of online space. However, new users will only get 7GB as free storage.

Why 7 GB? Well, the guys over at Microsoft claim that 99 percent of existing SkyDrive users never crossed the 7GB bar. However, the company is allowing expanding online storage to 20-, 50- and 100GB at an annual price of $10, $25 and $50 respectively.

In December last year, Microsoft launched SkyDrive app for Windows Phone and iPhone. Now the company is tweaking its iOS version of SkyDrive app, in order to make it functional on Apple iPad.

Against SkyDrive, Google is increasing its Gmail storage limit reflecting that the Internet search giant has added more servers prior to launch of its own cloud platform. As reported, Google Drive will offer 5GB of free online storage.

In the cloud competition, the biggest loser could be Dropbox. Dropbox gives 2GB of free online storage only, while Microsoft is offering 5GB more. Microsoft also undercut Dropbox in premium scenario. At Dropbox, users can extend the storage to 50GB at a cost of $9.99 per month and 100GB at $19.99 a month. Microsoft's prices are much low and features are almost the same at Dropbox. So we won't be surprised if SkyDrive turns out to a business killer for Dropbox.

(reported by Johnny Wills, edited by Dave Clark)