So I guess that Google’s new Gmail web-mail service isn’t a hoax after all. Kudos to them for the publicity stunt of announcing on April Fools.
More importantly, it sounds like they’ve got the right idea about storage, giving each user 1 gigabyte of storage. I think this is absolutely the correct thing to do. Economically, it doesn’t cost Google much to provide this (storage approaches free over time, and most people won’t use up that gig, at least not immediately). And it really ties the user to Google’s service. If I’ve got a gigabyte of old email on Google, that’s a very strong incentive to continue to use the service.
It will be interesting to see how Yahoo and MSN/Hotmail respond to this. They’ve both made a business out of charging extra for more than a very small amount of storage.
I’ve said it before, but I’ll say it again, modified slightly. When designing a service, assume hardware is free. Assume processing power and storage are infinite. Because they approach that over time, and limiting them does your service more harm than good. In addition, I think at this point you can also assume that bandwidth is free. That certainly wasn’t the case in the mid-1990s. But there’s now a glut, you can get very good deals on bandwidth these days, and it’s only getting better.

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