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[March 28, 2007]
Yahoo ups ante in e-mail with promise of unlimited storage
By MICHAEL LIEDTKE AP Business Writer
The Associated Press
In another reminder of technology's quantum leaps, Yahoo Inc.'s free e-mail service will provide unlimited storage space to its nearly 250 million users worldwide -- a concept that seemed unfathomable just a few years ago.
With the move, Yahoo will trump its two largest rivals in free e-mail, Microsoft Corp. and Google Inc., which currently provide 2 gigabytes and 2.8 gigabytes of free storage, respectively.
Yahoo's e-mail users currently get 1 gigabyte of storage. Yahoo plans to gradually lift all space constraints in May, but it will take several months before all of Yahoo's e-mail users have infinite storage space.
Time Warner Inc.'s AOL, the fourth largest e-mail provider, began offering unlimited storage for free last summer.
Yahoo's commitment will require substantially more resources because its e-mail service is nearly five times larger than AOL's.
"We're psyched to be breaking new ground in the digital storage frontier by giving our users the freedom to never worry about deleting old messages again," John Kremer, a Yahoo vice president of mail, wrote in an announcement posted late Tuesday on the company's Web site.
The expansion represents a dramatic shift from Yahoo's e-mail philosophy just three years ago. At that time, Yahoo was offering as little as 4 megabytes of free storage and charging nearly $50 annually for 100 megabytes of storage.
But Google changed the competitive landscape in April 2004 with the introduction of Gmail, which initially offered 1 gigabyte for free before steadily expanding to its current limit of 2.8 gigabytes.
Yahoo and its rivals have been willing to spend millions of dollars on adding storage space because they consider e-mail service a powerful magnet that spurs frequent visits, and thus more opportunities to sell ads. And the cost of storage has been declining for years, making it even easier to give users more space.
Meanwhile, e-mail's ubiquity and the proliferation of digital media -- from photos to music -- has increased the demand for more storage.
When Yahoo began offering free e-mail 10 years ago, the capacity of the entire service topped out at 200 gigabytes. It takes about 10 minutes for Yahoo's incoming e-mail to devour 200 gigabytes of storage today, Kremer wrote.
Sunnyvale-based Yahoo said its offer of infinite storage is meant to celebrate the 10th anniversary of its e-mail service. But the decision also comes a month after Google posed a more serious threat to Yahoo by dropping the final remnants of Gmail's invitation-only restrictions and opening up the service to all comers.
In February, Yahoo's e-mail attracted 243 million visitors with Microsoft in second with 233 million visitors, according to market research firm comScore Media Metrix. Gmail ranked third with 62 million visitors, a 68 percent increase from the previous year, followed by AOL at 50 million, comScore said.
Yahoo's expansion will be largely irrelevant to many e-mail users who haven't come close to approaching their current limit.
That's one reason why Redmond, Wash.-based Microsoft has no immediate plans to match Yahoo's offer.
"Storage has not been a major issue or pain point for customers for years now," Microsoft said Wednesday in a statement.
Mountain View-based Google has been adding about 145 megabytes of free storage to each e-mail account annually -- a pace that would raise storage limits to about 3.27 gigabytes in three years. The company has no current plans to change that formula, Google spokeswoman Courtney Hohne said Wednesday.
In an interview last month, Google co-founder Sergey Brin indicated the company would probably begin charging a small fee for people who want even more e-mail storage.
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