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Will force Gmail, Yahoo Mail to up their game?

If Google and Yahoo don't want to lose users, analysts say, step it up

August 2, 2012 01:22 PM ET

Computerworld - With Microsoft's new free email service getting so much attention, will Google and Yahoo need to update their own email offerings before they start to lose users?

Google's Gmail will need some updates to grab a piece of the spotlight, but Yahoo Mail needs an overhaul and it needs to move fast, according to industry analysts.

"This really ups the ante in the email game," said Al Hilwa, an analyst with IDC. "Microsoft's email may start to increase its adoption rate ... Everyone is at risk of market share changes. This is what it means to play in a competitive market."

Earlier this week, Microsoft took the wraps off, its new webmail service, which is set up to eventually replace the company's Hotmail. The updated service is a major redesign that synchronizes accounts across a range of devices and is integrated with social networking sites like Facebook, Twitter and LinkedIn.

With social connections, rich media, photos and video chat, is set to make older email services look stale. That could lure longtime Gmail or Yahoo Mail users away to try a new flashier email platform.

"I think there's a good chance that Microsoft can steal users from both Google and Yahoo with this new service," said Dan Olds, an analyst with The Gabriel Consulting Group. "These services are important to their respective companies since they are often the entry point for new users."

Since email is important to Google and Yahoo, both companies need to keep their users' attention from straying.

For Google, that may be an easier job since the company has been integrating social features from its Google+ network into Gmail.

Just this week, Google announced it is adding its Google+ Hangout feature, which allows users to video chat with up to nine people, to Gmail. The new service also will allow multiple Gmail users to view YouTube videos together, collaborate on Google documents and share their screen view.

Gmail also has a "People" widget geared to bring up the user's picture and offer quick links to start a Hangout or to show recent posts on Google+.

"I don't think Google needs to do too much here," said Brad Shimmin, an analyst with CurrentAnalysis. "They've already been quite active in socializing Gmail through Google+. For example, they completely revised Gmail's video collaboration service with Hangouts, which has become one of the company's bright stars in terms of garnering the attention of users and developers alike."

However, Olds said Gmail could use some updates of its own.

"Gmail, even with their newest user interface, isn't exactly intuitive for many users," he added. " looks to be easier to use and understand for both experienced and new users. Outlook also has more hooks into more social networking services, which is increasingly important to large numbers of users. Gmail doesn't present many obvious options for connecting to social networks aside from Google's own Google+ network, which makes them look less flexible."

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