Microsoft is preparing to launch its Windows Live Folders (aka Live Drive) beta which will allow users an online hard drive for their data. Such a service has long been rumored to be Google’s next big venture (under the aliases Gdrive, Google Drive, and Platypus), but besides some screenshots of a similar internal Google service a few months ago there’s been no indication that this is coming.

Live Folders sounds great, you’ll be able to access anything you upload from anywhere in the world simply by entering Live ID – and you’ll also be able to share data for collaborations and the like. You’ll also be to share your files with the public without giving them editing privileges.

Microsoft is clearly taking their push online very seriously, yet they are launching the service with a mere 500 megabytes of storage! Are you kidding me Microsoft? My cellphone has more storage space on it – why not just use that and then I too can access my data from anywhere?

AOL’s Xdrive gives you 10 times this amount of free storage, 5 gigabytes, for your files. Google’s service meanwhile is rumored to offer unlimited storage. Or you could even just upload your files to Yahoo Mail, which we know for sure will be offering unlimited storage this month. 500 megabytes is an insult.

LiveSide has some nice screenshots of Live Folders, which isn’t live just yet but when it is can be found here.