So here are the details: Users will be able to upload and store an apparent 500 Mbytes of files to the Web for use themselves, to share with friends, or to share with the public, and this will all be done via a Web browser. The site uses Ajax to allow users to create new folders on the fly. There's an option to allow friends to upload files to a user's own Live Folders. And it's all secured by Windows Live ID, Microsoft's Web authentication service.
The whole collaborative-if-you-want storage-as-a-service thing is certainly interesting. It lets me take files with me wherever I go, regardless if I brought my computers. It lets me publish files to the Web. And it lets me share and work together on files interesting my friends or co-workers and I. If security holds up to scrutiny, small businesses could use it sort of like a hosted FTP service.
Still, what's the verdict from what we currently know? Well, at 500 Mbytes, it would be a "that's nice." Microsoft will need much more storage if it wants to keep pace with other freebies in this crowding field. Xdrive, which AOL is offering for free, allows 5 Gbytes. Another service, Box.net, allows 1 Gbyte. And the rumored Google gDrive is supposed to be unlimited. Then again, maybe it's performance, not capacity, that matters the most on the Web.