Yahoo will raise the storage limit given to its free e-mail users and bump its premium subscribers up to a "virtually unlimited" capacity.
The company is keen to show that it is ready to take on rival Google, which grabbed headlines with the announcement that it will offer Gmail, a free e-mail service with a 1Gbyte limit.
Yahoo will raise the storage limits for its free e-mail users later in the second quarter or third quarter of this year from the exisiting 6Mbytes to 100Mbytes, a spokeswoman confirmed.
Premium subscribers - who pay close to $50 a year for 100Mbytes of storage - will be given "virtually unlimited" capacity later this year.
Jupiter Research analyst Olivier Beauvillain said that the extra storage offering was a necessary move.
"I think all the web-based e-mail providers such as Yahoo and MSN Hotmail need to react to what Google will launch," he said.
The main factors distinguishing different e-mail services are storage and antispam features and it is easier for users to compare the size of inboxes, he added.
Executives from Yahoo did not say exactly how much storage capacity premium subscribers will receive, but the spokesman confirmed that it was "on par" with Gmail's 1Gbyte limit, which lets users save about 500,000 pages of e-mail.
The unlimited increase is also being extended to include Yahoo subscribers through high-speed internet access partners such as SBC Communications.
Scarlet Pruitt writes for IDG News Service