Just when you thought Microsoft Exchange Server had beaten back all comers to establish itself as the email system of choice for businesses, the competition has resurfaced, but from an unexpected corner: Web-based email services. Although just about every email user I know has a Web-based email account in addition to a corporate email account, I've been running into more and more small businesses that use a Web-based service as their primary email system. Companies can use a businesslike email alias--for example, joebob@ mycompany.com--and forward messages from that address to their Web-based email accounts via a mail-forwarding service, which many Web-hosting companies offer free of charge.

To a large extent, it was Google's entry into the Web-based email business in April 2004 that added a little extra stamp of respectability to the entire arena, transforming its industry reputation from a haven for email spammers to a legitimate mail service. Furthermore, Google's Gmail email entry also spurred the two largest Web-based email players, Microsoft and Yahoo!, to improve and expand their offerings.

At the Gmail announcement, Google proclaimed that its new Web-based mail service, which is currently in beta, would allot a full 1GB of storage space per email account. Microsoft Hotmail and Yahoo! Mail, which previously offered their free-email users minimal amounts of storage (2MB and 4MB, respectively), countered by upping their storage for free email users to 250MB and 100MB, respectively. Microsoft and Yahoo! also decided to offer premium-paying customers 2GB email inboxes. And Microsoft increased the size of attachments that Hotmail allows, permitting free-email users to send as much as 10MB per attachment (Yahoo! already offers free-email users a 10MB-attachment capability) and premium customers as much as 20MB. (I expect that my Inbox will soon be flooded with huge .jpg images of friends' vacation photos.)

From a business perspective, the premium paid services (at about $20 per account per year) are offering faster performance, increased reliability, virus and spam filtering, and the fundamental equivalent of offsite backup for email file attachments. In fact, one of the catch phrases attached to these new Web-based email offerings is "Why delete any email?"

I fully expect the services and capabilities of Web-based mail platforms to continue to grow, as the competition between the three main Web-based email vendors accelerates. For example, after the major Web-based email providers announced that their services would scan messages for viruses and delete virus-infected payloads, Microsoft followed up with an announcement that it would give Hotmail customers the ability to cleanse viruses from email messages, rather than simply deleting infected messages, to avoid deleting information that email users might need.

And right at press time, Yahoo! announced that it had acquired Oddpost, a Web-based email provider that offers a competitive paid email service ($30 per year). The Oddpost interface resembles that of Microsoft Outlook and supports drag-and-drop message management. In addition, unlike Gmail, Hotmail, or Yahoo!, Oddpost lets you read blogs in a newsreader format and offers full support for Really Simple Syndication (RSS) feeds. Presumably, Yahoo! will add these features to its mainstream premium Web-based email product, and you can be sure that Microsoft will soon follow suit. On the Oddpost Web site, the company states that it's now working on a new, advanced Yahoo! Mail product.

Although Gmail is still in beta as I write this, its interface--even including advertising--is slicker and faster than that of Hotmail or Yahoo!. I expect that Hotmail and Yahoo! won't lag far behind Google's exploits and will probably make similar changes to their email services fairly soon (if they haven't released big changes already). I'm also willing to bet that Web-based email vendors will push hard on marketing premium services, not only to individual users but to the small-business community. Web-based email providers will probably begin offering features and services geared toward business users and even include such features in business-focused packages. And, with pricing for business-class email services probably in the neighborhood of $30 per seat per year, the cost model becomes highly compelling for the small-business owner.