MSN Hotmail Upgrades E-Mail, Increases Storage

MSN Hotmail has increased its free email storage to 250 megabytes and is offering its paying customers 2 gigabytes. The move comes as a bid to retain customers in light of the impending wide release of Google’s Gmail, which has 1 gigabyte of free storage.

MSN is also playing catch-up with Yahoo, which announced last week that it was upping its free storage to 100 megabytes, with 2 gigabytes for paying customers.

In addition to the increased storage, Hotmail will roll out free anti-virus protection powered by McAfee Security. The company claims this will make Hotmail the only free global email service to scan and clean incoming and outgoing email for viruses and worms before they enter a customer’s inbox. Yahoo Mail.

Though Yahoo does provide virus scanning for free and paid customers, cleaning is only available to its paid customers, according to spokeswoman Terrell Karlsten.

Hotmail is also deleting graphical ads from its paid email service, mirroring Yahoo’s announcement of a similar change last week. Free accounts will continue to display ads, as will be the case with Yahoo.

Hotmail is also changing the structure of its paid accounts. Paying customers currently have a subscription service called MSN Hotmail Extra Storage, with four levels offering between 10 and 100 megabytes of storage ranging in cost from $19.95 to $59.95 per year. All these customers will be upgraded to an updated version called Hotmail Plus offering 2 gigabytes of storage for $19.95 annually.

Upon upgrade, MSN Hotmail customers will also receive MSN Calendar free, enabling both individual and shared calendaring. Yahoo also integrates its mail program with a calendar function — a feature Google lacks.

“They’re getting a whole lot of storage for a nice price,” said Brooke Richardson, lead product manager for MSN communication services. Richardson said the new offerings will be rolled out over the next six months.

“The key thing about increasing storage is to make the email service more of a core resource in the user’s computing life. If you can put 250 megabytes worth the consumer will use it more often. The use creates more opportunities to click on ads, and since it’s ad-supported, that’s a good thing,” said Gary Stein, analyst for Jupiter Research, owned by the parent of this company.

“It’s clear why they’re doing the upgrade,” said Stein, attributing the move to the competition with Google. “Competiton forces you to change things. It’s good for the consumer.”

Though Google hasn’t yet taken Gmail out of beta, recent weeks have seen the company offer current testers increasing numbers of “invite a friend” opportunities. The company has also begun inviting its AdWords advertisers, which it says number around 150,000, to test Gmail.