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Google to Roll Out E-Mail Service

By JOHN MARKOFF

Published: April 1, 2004

AN FRANCISCO, March 31 - Google, the dominant Internet search company, is planning to raise the stakes in its intensifying competition with Yahoo and Microsoft by unveiling a new consumer-oriented e-mail service.

The new service, to be named Gmail, is scheduled to be released on Thursday, according to people involved with the plan. It will be "soft launched," they said, in a manner that Google has followed with other features that it has added to its Web site, with little fanfare and presented initially as a long-running test.

E-mail has become a crucial weapon in the competition to win the allegiance of Internet users, who often turn to one or two Web sites as the foundation for their online activities.

As MSN, from Microsoft, and Yahoo are preparing to attack Google's role as the first place most people turn to conduct an Internet search, Google is hoping to counter those assaults by moving onto the turf they have already claimed in providing e-mail services as part of their portals.

Google, which refused to comment on this latest move, is starting far behind Microsoft (34.4 million users, according to the Nielsen Net Ratings), AOL (31.8 million), and Yahoo (39.9 million). But Google, which is based in Mountain View, Calif., is planning to play on its information search strength to compete with the existing services.

Google will offer consumers better access to searching their own e-mail and could well upset the industry balance by offering free access to services that previously were available only by paying a monthly subscription fee.

The standard industry practice is to offer tiered e-mail services, providing only limited storage free and charging higher fees to users who want to preserve a larger number of e-mail messages for capabilities like online storage. Google, by contrast, is planning a service to be supported by advertising that will permit its users to store very large amounts of mail at no cost.

One internal Google study put the operational cost of maintaining e-mail storage at less than $2 a gigabyte, enough to preserve tens of thousands of messages of typical length.

In recent weeks, Google has picked up the pace of updating and adding new features to its basic search service, as part of its effort to position itself as a strong business ready to sell shares to investors in what is expected to be the most popular initial public offering by a Silicon Valley company in years.

Early this week, for example, Google polished its appearance, making the company's array of services more accessible.

The company also moved its Froogle catalog shopping search engine into a more prominent position on the first page of the Google Web site.

Google has been closely watched in Silicon Valley and on Wall Street during the last year for any indication about its plans for an initial public stock offering. The company has steadfastly declined to respond to speculation.

Its chief executive, Eric Schmidt, told The Wall Street Journal this week that the company was exploring many options, but he explained at a recent industry conference that Google did not necessarily need to move forward on an initial public offering anytime soon.

Google's entry into the e-mail business will sharpen the lines between the major competing portals like Yahoo and MSN and the Internet service providers like AOL, a division of Time Warner, and Earthlink. Google recently lost its position as search provider for Yahoo, which has turned to a company it acquired, Overture, to take advantage of the growing amount of advertising revenue available on search pages.

To date, Google has maintained a strong relationship with AOL. But as it enters a business that competes directly with one of AOL's core offerings, it could find that AOL, like Yahoo, will begin to view Google as a more direct competitor.

Microsoft has also dramatically increased the importance of building its ability to offer its own search services. The company has been showing a range of features that it hopes will make its MSN service more of a draw to Web users who rely on search engines as starting points for finding information and services on the Internet.

But as Google seeks to counter those thrusts from its competitors, it could find that an e-mail service that is advertising-based could also raise thorny privacy issues. At Google, one official said, the company has engaged in an intense debate over how extensively to exploit the content of e-mail.

Many people inside the company are worried that users might fear that the content of their e-mail messages could be used to tailor individual advertising messages, much as ad messages are now placed on pages tied to specific responses to search inquiries. Google hopes to quell any such concerns by assuring users that the content of their messages will remain private.

The e-mail service could also put new strains on the extensive Google network of servers, which is now devoted almost exclusively to offering immediate responses to search engine queries

Courtesy:

http://www.nytimes.com/2004/04/01/technology/01google.html?ex=1081828800&en=c869da5abc41d0e6&ei=5070
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