Techdirt:Yahoo Finally Responds To Gmail, Boosts Email Storage. Gmail is in the middle of a classic drag race with market leaders hotmail and yahoo.
Mail is where people spend lots and lots of their page views, so it inevitable that there would be a war here.
The really smart thing Google has done has been to latch onto an iconic feature that makes it easy to explain why you should switch.
Yes, you could talk for hours about the merits of this or that antispam filter. Or about their cool DHTML interface, but in a Drag Race, it is much easier to have one feature that stands out.
In this case, turning the whole race into a number. If Google has 1GB, Yahoo has 100MB and MSN has 2MB who is the winner?
Final point is that this is a wonderful strategy in a competitive sense because it pushed competitors in a way that is very hard for them to respond. The thrust is that we are better able to manage servers than anyone, so we can offer more storage than anyone. Means that for MSN and Yahoo to respond, they have a much higher cost structure and since they have huge installed bases, their marginal cost to add this is way worse than a new entrant.
Another bravo for Google.
Posted by rich at May 13, 2004 08:17 PM | TrackBackRich,
I think you articulated why I believe that Google poorly executed on the role out of Gmail. Google knew the response from both MSN & Yahoo! would be to up their free storage, but they also knew that this response would take time. Google took FAR TOO LONG between product announcement and actual product launch which gave the competition all the time they needed to react before their product even hit the market. The mass market doesn't even know that Gmail exists so by the time the product is launched, the pain point of storage will be gone from the mass market and less people will switch to Gmail.
Essentially the Gmail announcement told the competition exactly what Google was about to do in the market, and provided months of lead time for the competition to get out in front of them... to me, there is no greater mistake then announcing a superior product too soon and allowing your competition to execute better.
Just think about it, while some say that the 100 MB response from Yahoo! isn't enough, it is probably a short term response from Yahoo!. 100 MB is enough to remove the pain point for most if not all customers for the next 6 months until they can scale up to 1 GB per user at a later date, and at that point storage is no longer an attribute of competition in the web email space.
Posted by: Mark Williamson at May 17, 2004 08:09 PMGlad you like the site. I agree with you that they changed the basis of competition. Personally, I don't think that Google dropped the ball. YOu have to expect both Yahoo and MSN to respond.
Part of this is doing the "Red Flag" exercise. Get someone on your team to be the other guy. Then imagine their response and then your counter. The move to just match Google was to be expected from Yahoo in particular. Since they own Overture, they can do the same thing. The main thing though is that they launched the first salvo and like Wal*Mart or Dell, they are the low cost execution model.
When you are low cost and have capital, you can grind the other guys down. The fact that Yahoo couldn't match on their free service is a good example.
Posted by: Rich Tong at May 17, 2004 05:52 PMLove the site. While I believe that Gmail was a brilliant move by Google, I think they have really dropped the ball around the execution.
First why I think the move was brilliant:
Gmail changed the basis of competition for web based email applications from reliability/itegration into portals (Which both Yahoo! and Hotmail have)to storage limits and user interface (Which plays into Google's core competencies).
After working hard to change the structure of the free email buisness Google has really dropped the ball in terms of executing and they have given the competition the opportunity to react. Yahoo's announcement of 100MB email capacity is enough such that the mass market won't feel the need to switch from Yahoo! to Gmail... especially since Gmail hasn't offered any tools to make switching accounts easy.
Rather than applaud Google we should all view Gmail as a potential lesson in the making. Please see my trackback for my post on the "Failed execution of Gmail"
Posted by: Mark Williamson at May 16, 2004 10:12 AM