Gmail Steals Users From Hotmail

Most of the gains in users by Google's free Gmail Web-based e-mail service have come at the expense of Microsoft's Hotmail, an e-mail switching service said Wednesday.

Consumers who used Return Path's e-mail change of address tools were almost twice as likely to switch to Gmail from Hotmail than from Yahoo, the New York City-based company said.

Fifty-seven percent of the users with a new Gmail account were changing from Hotmail, said Return Path's 2004 data, while just 27 percent were switching from Yahoo. The remaining 16 percent was split between AOL, MSN, and Comcast.

The prominence of former Hotmail users in the Gmail ranks isn't due to a higher number of Hotmail users overall, said Return Path, since across the board, former Hotmail and former Yahoo users are consistently even.

Gmail, which is still in beta -- Google is known for labeling products as "beta" for years -- was the first free service to offer a gigabyte or more of free storage space. When it debuted nearly a year ago, it set off a space race among rivals. Microsoft Hotmail, for instance, upped its storage allowance to 250 megabytes for its free accounts beginning last summer.