Free MSN Hotmail users will be gaining 250 megabytes of storage, up from 2MB today, while premium users, for $19.95 a year, will be receiving 2 gigabytes of storage, MSN will announce.
MSNs move follows a firestorm of activity in the Web-based e-mail world after Google Inc. in April entered the market with a test version of its free Gmail service that provides a gigabyte of storage.
Yahoo Inc. last week beefed up its e-mail storage limits, increasing storage for free users from 4MB to 100MB and offering paying customers 2GB inboxes.
But not all of MSN Hotmails 170 million users will get the storage increase immediately. MSN plans to roll it out over time, starting in July in the United States. Paying users of its Hotmail Premium service will receive the extra storage first, MSN director Lisa Gurry said.
"Our primary goal is to make sure to keep service stable while also introducing the additional functionality," she said.
Yahoo faced performance hiccups with the launch of its expanded e-mail service.
Gurry said MSN Hotmail increased its storage caps "to take storage out of the consideration set" as the Web-based e-mail market shifts, as well as to meet new demands from users who are increasingly sharing and storing digital media through e-mail.
"Weve certainly seen customer demand, but the changing dynamics in the marketplace certainly impacted our decision as well," Gurry said. "We want to make sure we have a leading effort for consumers and are providing a healthy amount of storage."
Google officials on Wednesday declined to comment on whether the company plans to match or exceed the 2GB limit being provided by MSN Hotmail, Yahoo and other e-mail providers. Gmail remains in an invite-only beta test, and officials would not say when it will be available to the general public.
Users of MSN Hotmails current paid service, MSN Hotmail Extra Storage, will be migrated to a new MSN Hotmail Plus offering. Along with the 2GB of storage, they will be able to send attachments as large as 20MB and will receive an ad-free e-mail interface.
Free MSN Hotmail users will be able to send attachments as large as 10MB.
Also on Thursday, MSN Hotmail will announce new anti-virus features for all users. Starting in early July, users will be able to clean infected messages in addition to being able to scan them for viruses, Gurry said.