Yahoo Buys E-Mail Startup

Updated: Facing competition from Google's Gmail, the Internet company adds Oddpost to the battle plan.

Yahoo Inc. has acquired a Web-based e-mail startup company as it moves closer to rolling out further changes to its popular e-mail service.

In a message to subscribers posted late Friday, Oddpost Inc. said it had been bought by Yahoo and that its development team was focusing it energy on building new additions to Yahoo Mail.

"Oddpost.com will continue to operate with no interruption in service," the San Francisco company announced. "However, from this day forward, well be working on a new, advanced Yahoo Mail product."

Oddposts $30-a-year e-mail service focuses on an e-mail interface with functionality that is similar to that of desktop applications such as Microsoft Outlook, such as the ability to drop and drag messages. It also has a built-in news reader for aggregating Weblogs and RSS (Really Simple Syndication) feeds.

A Yahoo spokeswoman on Monday confirmed the purchase but declined to disclose its terms. Yahoo praised Oddposts technology and said that Oddposts employees would be integrated into Yahoo.

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"The acquisition of Oddpost provides Yahoo with outstanding technological expertise, which will be brought to bear on products across the Yahoo network, such as Yahoo Mail," said spokeswoman Mary Osako in a statement. " Oddpost represents the best and brightest in engineering talent, and we are excited to welcome them to the Yahoo family."

Competition among Web-based e-mail providers has intensified since Google Inc. entered into the market in April. Google unveiled an invite-only public beta of its Gmail service. Gmail provides 1 gigabyte of free storage and an interface that organizes e-mails through search and category tags rather than folders.

To read more about Googles Gmail, click here.

Gmail set off an e-mail storage race, but Yahoos latest acquisition could signal a new fight over the functions and features in Web-based e-mail.

Yahoo last month boosted storage limits to 100 megabytes for its free service and 2 gigabytes for paying users while also redoing its e-mail interface. Microsoft Corp.s MSN also has announced plans to increase storage for Hotmail.

The Oddpost purchase drew immediate speculation among some leading bloggers that Yahoo was attracted to Oddpost as a way to battle Gmail in its look and feel.

"Now, Google has competition on [the] elegance of [the] user interface," wrote Dave Winer, a co-author of RSS, in his Scripting News blog.

Oddpost didnt specify when its enhancements to Yahoo Mail would be ready but said its subscribers would be migrated over to Yahoo once the revamped service is launched. Oddpost also has stopped taking new subscribers.

Yahoo CEO Terry Semel said during a conference call with Wall Street analysts last week that the company was planning further product rollouts for Yahoo Mail over the next few months but didnt provide details.

Neither Oddpost nor Yahoo officials would specify when enhancements to Yahoo Mail would be ready, but Oddpost said that its subscribers would be migrated over to Yahoo once the revamped service is launched. Oddpost also has stopped taking new subscribers.

Oddpost CEO Toni Schneider said that the 3-year-old company formally launched its consumer e-mail service in February 2003. But even before that, it had begun promoting its Web-based e-mail client to enterprise software companies as a Web front-end option. Most recently, it signed a deal with Oracle Corp. for use in the Oracle Collaboration Suite, a Microsoft Exchange competitor.

Late last year, Oddpost began approaching consumer Web and e-mail services about licensing its application, but it had not signed any deals before Yahoo decided to acquire the company, Schneider said.

"Its no secret that the consumer Web mail space is heating up a lot, and theres a lot of renewed focus on it," Schneider said. "And we noticed that in the last few months." Oddposts Web-based e-mail application is based on browser technologies such as Dynamic HTML, XML and SOAP and is built for Internet Explorer 5.5 or higher on Windows, according to the company.

In its subscriber message, Oddpost responded rather whimsically to those who might fear that the company will be subsumed within a big corporation.

"On the contrary: Our technology will flourish like a palm tree and/or IT professionals waistline in Silicon Valley," the company wrote. "While the glory of Oddpost has, thus far, been witnessed by the eyes of an enlightened few, soon it will be savored by millions. We couldnt be more excited."

Editors Note: This story was updated to include comments from a Yahoo spokeswoman and Oddposts chief executive.

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