Yahoo Fires Salvo In E-Mail War

Yahoo Inc. is more than doubling its limits on free e-mail storage in its latest move to combat two of its biggest rivals, Google Inc. and Microsoft Corp.

E-mail accountholders will get up to 250 megabytes of free storage effective Monday, up from 100 megabytes previously offered by Sunnyvale-based Yahoo. The change follows Microsoft's recent decision to boost the free storage on its Hotmail service to 250 megabytes per account.

It's a defensive move by Yahoo, notes CBS News Tech Guru Larry Magid.

"Yahoo is having to play catch up with Google, which has announced its free Gmail system that gives people a gigabyte of storage. For most people that means not having to delete mail for five or more years," says Magid. "The problem with Yahoo and other free email services has been that mail boxes would fill up very quickly - often with spam. Offering more storage makes the services a lot more useful."

Yahoo, which runs the world's most popular Web site, is hoping the improvements will retain its current e-mail users and perhaps lure converts from other services.

Unlike Yahoo's e-mail service and Hotmail, Gmail remains in a test mode and is available only through invitations from Google or existing accountholders.

"Gmail is an interesting competitor," said Brad Garlinghouse, Yahoo's vice president of communications products. "It really has raised the game for everyone and that's good for consumers."

Besides increasing storage limits, Yahoo says it has upgraded the tools for verifying the identities of e-mailers and improved the features used to search e-mail content.

Yahoo promotes itself as the largest provider of free e-mail, with tens of millions of users. The company declined to offer precise numbers.