Google, the company that made off with the search market, is setting its sights on free e-mail.

The company, based in Mountain View, Calif., on Wednesday will launch a test with about 1,000 invited guests to try out a new e-mail service called “Gmail.”

Google, which made its name in search but has added numerous services, such as a news aggregation page and a newsgroup interface, says that Gmail is search-based e-mail.

Like Yahoo Mail and MSN Hotmail, Gmail will let users search through their e-mail. Unlike those competitors, though, Google will offer enough storage so that the average e-mail account holder will never have to delete messages.

Hotmail currently offers 2MB of free e-mail storage. Yahoo offers 4MB. Gmail will dwarf those offerings with a 1GB storage limit.

Google plans to make money from the service by inserting advertisements into messages based in part on their content, effectively extending its AdWords program for presenting contextual ads in Web pages to e-mail.

“The idea is that your mail can stay in there forever,” said Wayne Rosing, vice president of engineering at Google. “You can always index it, always search it, and always find things from the past.”

When asked whether Gmail represented further evidence that Google is muscling in on the turf of Yahoo, MSN and other Web portals, Rosing demurred.

“The way we’d like to say it is that part of our mission is to organize and present all the world’s information, and e-mail’s part of that information that currently is not well organized. That is the rubric under which we offer this.”

Source: C|Net | GMail

This might not be a 1st april prank… But this definitely looks like one:
Microsoft strikes back :: Hotmail service to include 1 Terabyte of storage