The MSN team is working on a new Windows Live service, code-named Live Drive, that will provide users with a virtual hard drive for storing hosted personal data.

Microsoft archrival Google is developing similar technology, code-named Gdrive, according to information Google accidentally shared with analysts in early March.

Google's Gdrive solution is expected to provide both consumers and business customers with an unlimited amount of online storage for their data. Google has declined to provide further specifics or a timetable for its planned Gdrive rollout.

According to sources, Google is working two other storage-related services: GDS and Lighthouse. All three projects are focused on delivering "infinite storage" and "infinite bandwidth," according to slides Google shared with analysts.

Microsoft, likewise, has shared few specifics about Live Drive. Microsoft Chief Technology Officer Ray Ozzie publicly acknowledged Microsoft's Live Drive plans in an interview with Fortune Magazine published on April 19.

"Microsoft is planning to use its server farms to offer anyone huge amounts of online storage of digital data," according to Fortune. "With Live Drive, all your information—movies, music, tax information, a high-definition videoconference you had with your grandmother, whatever—could be accessible from anywhere, on any device."

Microsoft has been eyeing the hosted storage space for at least two years. In 2004, Microsoft was rumored to be readying a hosted backup-and-restore service for SOHO (small office/home office) and consumer customers.

Sources close to Microsoft described that service as one where Microsoft would back up users' personal files on CD and/or DVD. Users also would be able to back up financial files, legal documents, digital photos, online music and home videos, and even put their most important files into a "digital safe-deposit box," hosted by Microsoft, sources said.

The Microsoft hosted storage service was expected to be available via subscription. It originally was expected to debut in 2005.

There are other places where storage figures into the Microsoft Live equation.

In March, Microsoft officials described the company's plans for making Live a developer platform in its own right.

As part of that strategy, Microsoft is opening up the Live platform to other Microsoft and external third-party developers. At the "core" level, said Brian Arbogast, corporate vice president for the MSN Communications Platform with the MSN and Personal Services Division, Microsoft is making available to developers three sets of Live interfaces: contacts, identity and storage. Microsoft is expecting developers to build on top of these when devising new Windows Live services.

Microsoft officials did not respond by the time this article was published to further questions regarding Live Drive's availability and planned target audience.