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Yahoo Inc. makes e-mail acquisition as Google battle intensifies
Wednesday, July 14, 2004
Yahoo Inc. girded itself for Google Inc.'s e-mail invasion by acquiring
Oddpost Inc., a startup that has gained a reputation for making
it easier and more enticing to communicate on the Web.
Yahoo closed the deal at the end of last week without making an
announcement. Yahoo and Oddpost confirmed the acquisition Tuesday
without disclosing the financial details.
Meanwhile, Google continues to expand beyond its renowned online
search engine. The company said Tuesday that it has bought Picasa
Inc., a company that makes tools for managing and sharing digital
photos. Google didn't reveal the financial terms of that deal either.
Yahoo already offers its own photo-sharing service.
Yahoo's Oddpost acquisition appears to be the company's latest
countermeasure to Google's foray into e-mail.
It's an important battleground. E-mail serves as a powerful magnet
that draws people to the companies' Web sites, which depend on a
steady flow of traffic to increase advertising revenue.
Since its launch in San Francisco three years ago, Oddpost has
laboured in relative obscurity despite winning praise for developing
a Web-based e-mail service that works more like a desktop application.
Oddpost had been charging $30 US per year for its e-mail service,
but has stopped opening new accounts because of the Yahoo acquisition.
The company's existing e-mail subscribers - the company has not
disclosed how many it has - will be shifted to Yahoo's service,
which ranks among the world's most popular.
The test version of Google's free e-mail service, unveiled under
the Gmail brand three months ago, has led Yahoo to aggressively
protect its turf.
In one of the biggest changes, Yahoo expanded the amount of free
e-mail storage from four megabytes to 100 megabytes - a move spurred
by Gmail's plans to give away 1,000 megabytes to each account holder.
Several other Web-based e-mail services, including Microsoft Corp.'s
Hotmail, have either expanded their free storage already or announced
plans to do so.
As part of the company's quarterly earnings announcement last week,
Yahoo CEO Terry Semel promised some "really cool additions"
to the e-mail service this year. Oddpost's 10-employee team presumably
will play an integral role in the upgrade.
"We intend to tap into Oddpost's fresh ideas and technological
expertise," Yahoo spokeswoman Mary Osako said.
Google hasn't disclosed when Gmail will be available to the general
public. The service has been limited to people who have been invited
to join by Google management or other account holders. Some Gmail
invitations have been sold on online auction site EBay, reflecting
the high level of curiosity about the service.
Yahoo shares gained eight cents US to close at $30.34 US on the
Nasdaq Stock Market.
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