Free Web Mail: Here to Stay?

Web mail just wants to be free--unless you can be coaxed to pay, of course.

Public providers of e-mail delivered via any Web browser would much prefer that you pony up for their fee-based services, and they are making increasingly compelling cases for you to do so.

But Web mail is booming, with no less than 355 million accounts worldwide at the start of the year, estimates the Radicati Group, a market research company in Palo Alto, California. Two giants dominate the market: Microsoft's MSN Hotmail makes up 37 percent of the total and Yahoo Mail is 30 percent, says Marcel Nienhuis, Radicati senior analyst.

In the Free Arena

Both leaders say they are committed to offering free versions of their services--largely to keep a full pipeline of potential customers for those paid services. Moreover, while the no-cost offerings suffer from tight constraints on storage space, they are gaining slick new features.

"We've continued to make innovations in the interface and the infrastructure," says Larry Grothaus, MSN lead product manager. Most visibly, Hotmail rolled out usability improvements last fall, including a Today view that separates out the mail coming from your contacts. (To aid this process, you can import your contacts from Outlook or Outlook Express.) Behind the scenes, MSN is strengthening its efforts to improve measures against spam and viruses. Storage for a free Hotmail account remains limited to 2MB, however, and you can't send messages larger than 1MB.

Yahoo Mail is a tad more generous, with free accounts offering 4MB of storage and messages up to 2MB. In February the service added the capability to autocomplete addresses after you type the first few letters, much as Outlook and other client mail packages can do. In the fight against spam and viruses, "we now scan every single e-mail attachment that comes in," says Brad Garlinghouse, Yahoo vice president of communications products. Calendar functions are also available for free.

The two competing services have added a number of nice touches, such as printable views of messages and integration with their respective instant messaging software. Both also walk a thin line in terms of the obtrusiveness of the advertisements that support them. Last year Yahoo Mail reduced the number of ads it runs, which has worked out well for users and advertisers, Garlinghouse maintains. MSN's Grothaus, in turn, says that "we got rid of flashy, annoying ads because of customer complaints."

Spam-Stomping Central

Given their enormous audiences, the two Web mail providers live in the center of the spam hurricane, fighting a daily battle against billions of incoming junk messages.

"The more spam we can keep off the network, the better performance will be for everyone," Grothaus notes.

While spam is the top issue with users, defining spam is difficult because the definition varies with the recipient, Garlinghouse says. Yahoo Mail and Hotmail each encourage users to mark what they consider spam, generating a flood of data back to the providers, which can tune their filters accordingly. Also, the services allow users to block addresses and stop HTML images from loading before they know the images are safe.

Among other steps, Hotmail works with Brightmail, a company that sets up dummy mail addresses and monitors what spam they collect. It adopted Human Interactive Proof technology (which makes you eyeball an image and pick out what it spells) to stop spammers from registering automatically via software.

The paid Yahoo Mail Plus service offers another twist. You can set up multiple addresses that you can handle differently within your account--dedicating one to your EBay dealings, for instance.

Paying Up (and Up)

The Web mail giants won't disclose how many of their customers haul out their credit cards for e-mail. Industry analysts suggest the numbers are significant and growing.

"They try to make it pretty irresistible for people who use it each day to sign up for paid service," says Robert Mahowald, research manager for collaborative computing at IDC. "To me, $20 a year for e-mail is a good price."

"More and more people are opting to pay," agrees Radicati's Nienhuis. "Two megabytes of storage is almost nothing; you have to look at it almost daily to delete unnecessary messages." The paid services go far beyond basic e-mail, with group-collaboration features and other handy extras, he adds.

Hotmail Extra Storage comes in various plans that start at $20 a year for 10MB of storage, the ability to send 3MB attachments, and access via Outlook or Outlook Express. At the high end, you can pony up $10 a month for MSN Premium, which provides up to 11 accounts, calendar functions, antivirus software, and a host of other goodies.

Yahoo Mail offers plans starting with 10MB of storage (and 3MB attachments) for an annual fee of $10. Yahoo Mail Plus bundles in access to POP e-mail, local message backups, and other services at a cost of $30 yearly and up. Among other options, Yahoo also offers a Business Edition for small firms; at $10 a month, this gives you five e-mail accounts with 25MB of storage each and ownership of a domain name.

Hub of the Communications Universe

Given the spread of broadband connections and the availability of powerful Web programming tools, "the lines between Web mail and client mail are increasingly being blurred," Garlinghouse says.

And as it integrates more seamlessly with other applications, "e-mail is increasingly less about just sending and receiving messages, and more about life management," he adds. "It's a communications hub."

This trend is expected to accelerate. For instance, Garlinghouse says, "a very large number of the attachments we handle are photos. We want to make a better experience to manage and share them, and to order a print."

Web mail providers expect to continue investing heavily in measures for zapping spam and viruses. They'll push further into mobile devices, aiming to improve features and widen distribution on PDAs and smart phones. They'll watch for incoming technologies to integrate, such as the RSS (Real Simple Syndication) instant-notification standard.

And they'll keep offering free versions, probably with the current level of storage limitations.

"Web mail is a growing category," says IDC's Mahowald. "There will always be a market for Web mail, cheap or free."

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