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Not to be outdone by Google's recent bold e-mail offering, Yahoo says that it plans to dramatically raise the storage limit given to its free e-mail users while at the same time bumping its premium subscribers up to a "virtually unlimited" capacity.

The storage hikes were announced by Yahoo executives at an analyst meeting this week, where the company was keen to show that it is ready to take on rival Google.

Google grabbed headlines with the announcement in March that it is planning to offer a free e-mail service with a 1GB limit dubbed Gmail.

Higher Limits

Responding to the Gmail offer, Yahoo plans to raise the storage limits for its free e-mail users later in the second quarter or third quarter of this year from the current 6MB to 100MB, a U.K. spokesperson for the company confirms Friday.

Meanwhile, premium subscribers--who currently pay close to $50 a year for 100MB of storage--will be given "virtually unlimited" capacity later this year, the spokesperson says.

Jupiter Research analyst Olivier Beauvillain says that the extra storage offering is a necessary move.

"I think all the Web-based e-mail providers like Yahoo and [Microsoft's] MSN Hotmail need to react to what Google will launch," Beauvillain says.

The main factors distinguishing different e-mail services are storage and antispam features, he says, and it's easier for users to compare the size of inboxes, he adds.

"Yahoo and MSN really can't maintain their lower storage offers against Gmail," Beauvillain says.

Executives from the Sunnyvale, California, company did not say exactly how much storage capacity premium subscribers will receive but the spokesperson confirms that it is "on par" with Gmail's 1GB limit, which lets users save about 500,000 pages of e-mail.

"Basically it will be hard for users to perceive that there is a limit," the spokesperson says.

The unlimited increase is also being extended to include Yahoo subscribers through high-speed Internet access partners such as SBC Communications, she says.

User Reaction

London resident Rob Cave uses Yahoo's free service for his main e-mail account and says that he is very happy about the extra space.

"A hundred megabytes is absolutely fantastic because I was bumping at the edge of my limit and there's a lot of e-mail I don't want to download," he says.

Cave says that the move will definitely keep him in Yahoo's hands, although he was not tempted by Google's 1GB offering because of privacy concerns. Gmail is still in beta but has already come under scrutiny for its plan of scanning e-mail messages and placing advertisements that it thinks are relevant next to them.

However, Beauvillain does not believe that privacy concerns will stop many users from adopting Gmail, adding that Google has already expressed its intention to address the issue. What may stop users from switching to Gmail is simply the hassle of changing e-mail addresses, he says.

"MSN and Yahoo have an existing base of users and they tend to be loyal to their e-mail provider because it's such a pain to switch and notify all your contacts," Beauvillain says.

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