July 12, 2004 10:42 AM PDT

Yahoo acquires Oddpost to bolster e-mail

Online portal Yahoo has agreed to buy Oddpost.com, a vendor of online e-mail and news services, for an undisclosed sum.

The two companies confirmed Yahoo's plan to purchase Oddpost on Monday, but disclosed few details about the buyout. According to a source familiar with the acquisition, Yahoo paid close to $30 million for the company. Oddpost's 10 employees, based in San Francisco, will now report to Yahoo's Sunnyvale headquarters.

"The acquisition of Oddpost provides Yahoo with outstanding technological expertise, which will be brought to bear on products across the Yahoo network, such as Yahoo Mail," said Yahoo spokeswoman Mary Osako.

In a document posted to its Web site, Oddpost told members it would continue to operate existing e-mail accounts, but said the company will focus on helping Yahoo produce a new version of its online e-mail service. Existing Oddpost members will be migrated to Yahoo when the portal's next Web mail update is introduced, according to the document. The announcement did not give a date for the debut of the new Yahoo Mail release.

The Oddpost acquisition underscores the recent surge in competition among providers of free e-mail services. Yahoo is fighting for business against such rivals as Microsoft's Hotmail service, and is preparing for the entry of a promising new contender--Google's Gmail system. Gmail promises users 1GB of storage, which in June led Microsoft to pledge to raise Hotmail's free e-mail storage limit from 2MB to 250MB. Yahoo upgraded to 100MB for free users and 2GB to paying e-mail customers.

Like Microsoft, Yahoo attempts to use its free Web mail to lure users to pay for additional online services, such as expanded memory or the ability to manage multiple e-mail accounts from a single interface. But since its founding in 2000, Oddpost has existed somewhere between those free services and the more expensive e-mail software marketed by Microsoft and others. For $30 per year, Oddpost has offered 50 megabytes of online e-mail memory, along with spam filtering tools and daily news aggregation. The service also offers some of the more advanced features of shrink-wrapped software like Microsoft's Outlook, such as automatically generating frequently used e-mail addresses as they are typed into new messages.

Oddpost also allows people to aggregate news feeds, share photos and compose e-mail without constantly refreshing a page as Yahoo and other free e-mail services currently require. It does this with a combination of dynamic HTML, javascript and XML.

"Our vision is that people want more than e-mail...but in one place rather than nine," said Toni Schneider, Oddpost's chief executive, who will report to Brad Garlinghouse, Yahoo's head of communications. "We think our technology is a perfect fit for the types of services Yahoo has."

Schneider declined to comment on financial terms of the acquisition.

In its statement, Oddpost said existing accounts would be extended until the Yahoo service is launched, but indicated that it would not accept any more new users. In addition, the company said its customers would be offered a year of premium Yahoo e-mail service, including the 2 gigabytes of storage, free of charge. The company, which has maintained a humorous and decidedly anticorporate image, attempted to assuage concerns among its members that it was "disappearing into the bowels of corporate America" as a result of the acquisition.

"Our technology will flourish like a palm tree and/or IT professional's waistline in Silicon Valley," the statement promised. "While the glory of Oddpost has, thus far, been witnessed by the eyes of an enlightened few, soon it will be savored by millions."

News.com's Jim Hu contributed to this report.

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Yahoo Email Will Benefit from Oddpost
Yahoo's premium email service will benefit from the purchase of Oddpost. When Yahoo boosted storage for paid customers in June, it also added some decorative features to its email service, but did little to enhance overall quality of the service. It did not add any significant new functions. Assuming Yahoo takes full advantage of Oddpost, we could expect to see integration of RSS feeds into Yahoo mail and perhaps some tools to manage the 2 Gb of disk space paid customers get. I'd like to see a client side application that integrated my web interface and storage with the desktop.
Posted by djysrv (15 comments )
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