Microsoft is playing Santa by gifting its Windows Phone users 20GB of free SkyDrive storage for a year.

The software giant is being very generous this holiday season and is giving additional SkyDrive storage to Windows Phone customers. Market observers believe that Microsoft's initiative will lure new customers to buy a Windows phone and at the same time, it will help the company retain existing customers.

SkyDrive storage, Microsoft's cloud-based file hosting service, allows customers to upload and sync files on their devices to cloud storage and then access them from any Web browser. One of the key ideas of cloud storage is to free up valuable memory capacity on a user's mobile device.

Microsoft recently sent out an email to its Windows Phone users regarding the unexpected Christmas gift, which the company is giving.

"To show our appreciation of Windows Phone customers, we are giving you an extra 20 GB of free SkyDrive storage for one year. This is in addition to the 7 GB of free SkyDrive storage that all customers currently have," per the Microsoft email.

"SkyDrive is built into your Windows Phone. It's personal online storage that you can access - along with the photos and files you save there - at SkyDrive.com from any Internet-enabled device, and through the SkyDrive mobile app," the email read.

Interested customers have to register themselves before January 31, 2014 to get the free 20GB SkyDrive storage. Customers will then have access to the free storage space for one year.

Many smartphone customers now use their handset to take pictures. Nokia Lumia 1020, which has a 41-megapixel rear-facing camera, has the ability to take pictures at a very high resolution that occupies a lot of valuable memory on the handset.

Windows Phone users (especially Lumia 1020) who have access to Wi-Fi, can now take pictures and enable the automatic feature, which will send a back up photo to their SkyDrive storage, allowing them to free up the memory capacity on their smartphones for other use.

This is not the only instance when Microsoft has given away free SkyDrive storage to its customers. Microsoft Office 365 subscribers get over 50GB of free SkyDrive storage. Microsoft Surface 2 or Surface Pro 2 customers also get a whopping 200GB Microsoft cloud storage for two years.