Google Gigs It Up

It was a year ago today that Google (Nasdaq: GOOG  ) first announced that it was entering the free email service arena with its Gmail offering. By giving its first batch of invited beta users a whopping full gigabyte in data storage -- at a time when Yahoo! (Nasdaq: YHOO  ) and Microsoft (Nasdaq: MSFT  ) were providing its freeloaders with just a few mere megs -- more than a few of us were quick to wonder if this was all part of some elaborate prank given Google's peculiar launch date.

It wasn't. It was real. And as if to honor the clever anniversary date, Google is raising the stakes this morning by upping the storage capacity to a beefy two gigs.

It's a brilliant move for Google, especially since it took Yahoo! all of 51 weeks to eventually match Google's original offer while Microsoft's Hotmail is still providing a stuttered response. While storage capacity has only gotten cheaper to provide, Yahoo! and Microsoft have premium email products to protect. If they offer too much on the free side, there will be little incentive to prevent paying customers from downgrading to the freebie stuff.

That's why Google has been a thorn in both of their sides. It isn't promoting premium upgrades. In fact, Google is threatening that two gigs is simply the beginning. It has also been rolling out rich formatting as a way to give its email users a wider range of creative design choices in the black and white world of free email.

Though Gmail is still in beta testing, Google has been liberal with its invitations lately. In other words, a formal launch can't be too far away. While some may argue that giving so much away in a free product will have Google relying too much on one revenue stream -- 98% of the company's revenue is coming from advertising these days -- it's also the perfect way to get noticed.

Now that the precedent has been set, the market will be watching to see what Google has in store for Gmail when its second anniversary rolls around next year. It better not forget to bring another present.

More of our recent thoughts on Google:

Longtime Fool contributor Rick Munarriz is a happy Google user. However, he does not own shares in any of the companies mentioned in this story.The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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