Yahoo Mail's road to success: Sticky content, regular upgrades, and keeping up with Gmail

David Cotriss — Thu, 16 Oct 2008 10:11:11 -0700

(The following is part of the Standard's First To Market special feature) If Web mail providers were countries, Yahoo Mail would surely rank as a superpower. As of May, there were 263 million users of the service, according to comScore Media Metrix, more than the entire Internet-connected population of China. Yahoo Mail has remained the top free online email provider since launch, surpassing other popular services such as Microsoft's Hotmail (260 million users) and Google's Gmail (over 90 million users).

In an age when a Web browser is available on every PC and laptop, and increasingly on mobile devices, Web mail is more convenient and accessible than standalone email clients, such as Outlook and Apple Mail. It's also more permanent -- addresses for ISPs and employers may come and go, but people can keep their Web mail addresses for years, as they change jobs and places of residence. Aside from its early market entry, Yahoo Mail's success is due in large part to its constant expansion to meet user needs and answer the challenges of competitors.

John Kremer, vice president of Yahoo Mail, explains that the service was offered free to users starting in October 1997.

"Yahoo had acquired Four11, the company that provided RocketMail, and based Yahoo Mail on the . . . technology," Kremer explains. It quickly became a hit, he says, thanks to RocketMail's faster performance, customizable interface, and larger storage than other free Web mail services. Early competitors included Microsoft (after it acquired Hotmail), Lycos and Excite Mail, he adds.

Gartner analyst Matt Cain explains how the Web-based email market evolved, and how Yahoo Mail helped boost Yahoo's other services. "The early days of free consumer email were characterized by many small suppliers -- many of whom had a business model of reselling service to websites, which would offer their own email system," Cain says. "During the dot-com boom, vendors like Critical Path, Mail.com and Commtouch racked up market valuations close to a billion dollars. Other vendors like Hotmail and RocketMail offered email directly to consumers. The former business model failed, and the latter succeeded. Consequently, portal sites like Yahoo and MSN, needing to keep their sites sticky, picked up these free email services once they got critical mass. These portal sites then had the capital and the eyeballs to rapidly accelerate growth of the business." Lycos and Excite Mail are still operating, but never reached Yahoo's level of success. "My sense is that they were a victim of the whole property -- e.g., not enough tempting content around it to make it all sticky like Yahoo," Cain says.

Responding to user needs has also played a key role in Yahoo Mail's ability to maintain its lead. "Yahoo has been aggressive with Yahoo Mail, adding unlimited storage and a rich Outlook-like user interface," Cain explains. "Its success led it recently to adding new domains to allow users to have relatively straightforward names, since yahoo.com had run out of reasonable names. Ironically, perhaps, one of the new domains they added was rocketmail.com."

A few other improvements that have helped Yahoo maintain its dominance: It was the first Web mail service to offer free, real-time text messaging to mobile phone numbers. Yahoo is also opening Yahoo Mail to external developers to provide users with easy access to relevant content, such as maps or invitations, within their e-mail interface. It's worth noting that while Yahoo Mail may appear to be on the cutting edge, many new features have been prompted by innovations brought to market by Gmail, including unlimited storage and an AJAX-based user interface. Nevertheless, Yahoo Mail remains in the lead . . . at least for now.

(Image: Yahoo Mail, circa 2002. Source: Internet Archive)

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Yahoo Mail's road to success: Sticky content, regular upgrades, and keeping up with Gmail