The Genius of Gmail:

Old Landscape:
Microsoft and Yahoo! have been offering free email service (2MB and 4MB respectively) for a long time. To generate revenue from email each has done banner ads as well as offering account upgrades (think $50/year for 50MB) to give users more space.

Enter Gmail:
Google’s entry into the market is pure genius. Many questioned why you enter with 1000 MB, which appears to be overkill. 1000 MB isn’t overkill at all; it is the perfect amount to make users believe they have enough email storage to not delete items. Users will now keep more email and use Google search to help them find their email… thus making Google a larger part of their life when it comes to information retrieval. It is also the perfect amount to force Microsoft and Yahoo! into a tough decision…. how to change their business model.

Imagine you are Microsoft or Yahoo! and you have thousands of customers paying yearly fees for a service that is about to become obsolete… what do you do? The interesting part is that Gmail is disrupting the business model of free email. I would bet the farm that Banner ads don’t generate the revenue to support 1 GB of free email, and that Google has run the numbers and they really believe that contextual ads will do the trick. I think it is clear that the Microsoft / Yahoo! model of having users pay yearly fees for email accounts based on storage is now dead. Will Microsoft and Yahoo! counter with innovative features and business models, or will they just simply match Google? I bet they just follow… Now for some thoughts about what Gmail is lacking:

Missing Items:
Lowering switching costs when it comes to email is HUGE, and the Gmail team needs to lower this barrier in the following ways:
• Create tools to import email, contacts, calendar info, etc. from other services
• Optional mass email to contacts about new email account
• Pull email automatically from old account
• Other features I have not yet thought of...

Here is some more info about Gmail… including features and screenshots:
To better understand the product lets talk a little about the features as well as look at the screen shots. Let's start with the features:
• 1000 MB of free storage
• Search your email using Google
• Grouping of email by thread
• Ability to “label” email
• Key shortcuts – I really don’t know what this does.

Now for the screen shots:

http://www.fury.com