Trending: Microsoft AI chief Harry Shum to depart in February after 23 years at the tech giant

Microsoft will offer unlimited space for photos and Office documents as part of an upcoming revamp of its Windows Live SkyDrive cloud-based storage service, according to a report by over the weekend. In addition, the site reports today that Microsoft will introduce premium plans for other types of files, including music and video, letting people store more than the current 25GB free limit.

The news, not yet confirmed by the Redmond company, follows a report that competitor Dropbox is getting close to landing a large financing round to accelerate its own growth. Dropbox puts a 2GB storage limit on its free accounts.

On the music front, digital lockers from Google and Amazon have also recently heated up the competition in the online storage market, as has Apple’s iCloud synchronization and storage service.

Microsoft’s SkyDrive is used as a behind-the-scenes tool for Office Web Apps, Hotmail, Windows Phone and other Microsoft products, but the company is trying to give the storage service more of an identity and role of its own, starting with an update this past June.

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