Yahoo girded itself for Google's e-mail invasion by acquiring Oddpost, a start-up that has gained a reputation for making it easier and more enticing to communicate on the Web.
It closed the deal at the end of last week without making an announcement. Yahoo and Oddpost confirmed the acquisition on Tuesday without disclosing the financial details.
Meanwhile, Google continues to expand beyond its renowned online search engine. The company said on Tuesday that it has bought Picasa, a company that makes tools for managing and sharing digital photos. It 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' websites, 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.
It had been charging US$30 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 - it 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 100MB - a move spurred by Gmail's plans to give away 1,000MB to each account holder.
Several other Web-based e-mail services, including Microsoft'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,' spokesman 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 its management or other account holders. Some Gmail invitations have been auctioned on eBay, reflecting the high level of curiosity about the service.
