INTERNET Yahoo makes changes to remain competitive

The service will grow in the coming months.
KNIGHT RIDDER NEWSPAPERS
SAN JOSE, Calif. -- Weeks after Google made waves with a new service called Gmail, Yahoo has promised an overhaul of its own mail service, including unlimited storage for premium users.
The new Yahoo Mail will roll out in phases this summer, said Jim Brock, Yahoo's senior vice president for consumer services.
"Our objective has been to make storage limits a nonissue for users," Brock said.
Yahoo announced the improved mail service at its annual analysts meeting in San Francisco. The company used the daylong event to tout its status as the top Internet Web site and to lay out a road map for its growth.
The company gave analysts a peek at several coming products and services, including Internet phone-calling that is integrated with instant messaging and a "deskbar" that streams news headlines, weather and other information across a computer screen.
Yahoo also reiterated that, in the coming months, it plans to redesign its home page, which has changed little over the years.
Upcoming changes
Details of the upgraded mail service were sketchy. But company officials said it will be more tightly integrated with Yahoo's other services. Users of Yahoo Photos, for example, will be able to easily e-mail photos to friends without having to click over to Yahoo Mail. The company will also redesign Yahoo Mail's user interface, making it "cleaner," a spokeswoman said.
Storage limits for free mail users will jump from 4 megabytes to 100 megabytes, while premium users who pay an annual fee will get "unlimited" storage.
Yahoo is the top e-mail provider with about 40 million users. But Google began publicly testing a free Web mail service last month that comes with 1 gigabyte of storage, far more than other mail providers now offer.
The competition
The meeting with analysts comes as Google, one of Yahoo's most formidable competitors, prepares for an initial public stock offering later this year. The offering will add billions of dollars to Google's balance sheet, allowing it to more easily move into areas dominated by Yahoo.
Yahoo executives made only veiled references to their competitor. But Chief Executive Terry Semel said that Internet searching, Google's mainstay, will be a main focus for Yahoo.
Until recently, Yahoo was content to have Google supply its search results. But over the past 18 months, Yahoo invested heavily in developing its own search technology. During that time, its search engineering team grew from 15 people to about 500.
In February, Yahoo severed its relationship with Google and began offering its own search results.
Yahoo executives said they believe competitors were surprised at the sophistication of the company's search technology.
"We wanted to dominate search," Semel said. "We really took off. We moved like the wind. I think that what we pulled off was nothing short of a miracle."
Yahoo's user base continues to grow at a fast clip, with the number of paying subscribers now at 5.8 million. Revenues this year are expected to exceed $2 billion. And Chief Financial Officer Susan Decker said Yahoo could grow into a $5 billion company in the next several years.