Microsoft discontinues standalone licenses for SharePoint and OneDrive

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Microsoft is turning off the tap for standalone SharePoint and OneDrive licenses. Specifically, SharePoint Online Plan 1 and 2, as well as OneDrive for Business Plan 1 and 2, will be gradually phased out. Starting June 2026, no new customers will be able to purchase these plans, and existing contracts will run until December 2029 at the latest.

Microsoft cites low demand, increased instances of “unintended or non-standard use,” and higher operating expenses as reasons. The official announcement does not clarify what exactly lies behind the vague wording – one possibility is the use of the services as cheap cloud storage instead of an integrated collaboration platform within M365. The affected standalone licenses cost $5 (Plan 1) and $10 (Plan 2) per user per month, respectively.

Forced into expensive complete suites

After the discontinuation, users are expected to switch to M365 suites such as Business, E3, or E5. However, these cost a multiple of the previous standalone licenses: Microsoft 365 E3 costs around 36 to 39 euros per user per month in the EU, and E5 even 57 to 60 euros. In addition, Microsoft will increase the prices for these suites by 5.5 to 8.3 percent in July 2026. For small and medium-sized enterprises, this means a five- to tenfold increase in costs, combined with functions such as Exchange or MS Teams, which they may not need at all.

The technical differences between the affected license variants are considerable: SharePoint Online Plan 1 offers basic functions such as document management, task management, and 1 TByte of pooled storage plus 10 GByte per user. Plan 2 adds enterprise search, business intelligence, workflow functions with Power Automate, as well as eDiscovery and data loss prevention. For OneDrive for Business, Plan 1 also provides 1 TByte of storage per user with a 15-GByte file size limit, while Plan 2 offers unlimited storage (starting from 1 TByte, expandable to 25 TByte for MS Teams) and extended compliance functions.

Transition periods and alternatives

The timeline for discontinuation is staggered: at the end of May 2026, no new customers will be able to book licenses, but existing customers can still extend them. From January 2027, this will no longer be possible either; existing contracts will continue until their expiration. Full support ends in December 2029. By then, Microsoft intends to help partners identify affected customers and support their migration through the Cloud Ascent tool. The analytics tool will be updated by the end of February 2026.

In addition to the complete suites, Microsoft also mentions capacity packs for additional SharePoint storage and pay-as-you-go storage, which has been on the roadmap since September 2025 and is intended to offer flexible billing.

Part of the cloud strategy

The decision fits into Microsoft's strategy of increasingly pushing customers towards integrated suites that also include AI functions like Copilot. Similar discontinuation of individual products has occurred multiple times in the past, for example with Office Online Server. The trend is clearly moving away from individual products towards comprehensive subscriptions. The outlook for further standalone offerings from Microsoft is accordingly bleak.

(fo)