The domino effect Google started in April when it announced plans for a free e-mail service with 1G-byte of in-box storage continued Wednesday, when Microsoft promised to boost Hotmail in-boxes to 250M bytes from the current 2M bytes.
The storage increase for Hotmail will be rolled out starting in July in the U.S. and other countries, said Lisa Gurry, director of Microsoft's MSN Internet division. "The landscape has changed regarding users' need for extra e-mail storage and we don't want storage to be an issue for any Hotmail user," she said.
Gurry declined to reveal the geographical rollout schedule but said Microsoft plans eventually to extend the bigger in-boxes to all 170 million Hotmail subscribers. Asked if Microsoft was responding to Google's 1G-byte e-mail service, which is still in a test phase, Gurry declined to address that service specifically, saying only that Hotmail is responding to customer feedback.
Yahoo last week announced plans to boost the in-box size for its free Web-based e-mail service, from 4M bytes to 100M bytes.
Other enhancements to the Hotmail service include the ability to send attachments up to 10M bytes in size, up from a previous e-mail maximum size of 1M-byte including attachments, and the cleaning of viruses in infected outgoing or incoming e-mail messages, she said. Previously, Microsoft scanned all outgoing and incoming Hotmail e-mail messages, but didn't clean them, she said. All Hotmail users worldwide will receive this feature in July, she said. Microsoft provides this antivirus service in partnership with Network Associates Inc.'s McAfee unit. As it has done in the past, Microsoft will continue providing antispam features in Hotmail, in partnership with Brightmail Inc., she said.
As providers of Web-based e-mail compete to retain subscribers and win new ones, they should focus on features beyond in-box capacity, said Allen Weiner, a Gartner Inc. analyst.
"We're having a mini-war in the free e-mail area right now, and I think the war has been focused in the wrong direction," he said. "For each of the major free e-mail providers to compete by offering more and more space doesn't seem sensible to me. ... Giving users more storage space doesn't really do much except create more clutter."
All the extra in-box space will be of little use if the users aren't given tools to categorize and retrieve messages, which is why Microsoft is doing the right thing with its plans to develop broad search functionality that covers the Web, e-mail and documents in PCs' local hard drives, he said. Then the e-mail service should be complemented with other Internet services, such as online calendars, he said.
Microsoft also announced a new fee-based e-mail service called MSN Hotmail Plus, which will offer users 2G bytes of in-box storage and the ability to send 20M-byte attachments for US$19.95 per year. Previously, Hotmail users could buy extra storage on top of the standard 2M bytes that the free service features at different price levels, starting at US$19.95 per year for 10M bytes of in-box storage and a maximum attachment size of 3M bytes up to the highest tier, which at US$59.95 per year offered 100M bytes of storage and a maximum attachment size of 20M bytes. Hotmail Plus users also get the benefit of not receiving graphical advertisements.
Yahoo has opted to do a similar thing by eliminating its tiered extra storage offers for its Web-based e-mail service, offering instead one fee-based plan of US$19.99 per year which gives users 2G bytes of in-box storage.