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AOL gets ready to launch free Web e-mail

America Online is testing a service with 100MB of e-mail storage, as it prepares to square off with Yahoo, Hotmail and Gmail

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By Jim Hu CNET News.com

America Online is testing a Web-based e-mail service that will compete with Yahoo Mail, Microsoft's Hotmail and Google's Gmail.

Right now, the beta service is available to AOL subscribers only, but it will eventually be offered for free to the public, the company said on Wednesday. The service, dubbed "AOL Mail on the Web," is expected to officially debut early next year for members, and later in the year for the public.

"This is paving the way for our free Web mail service that we will be offering to a wider audience in 2005," AOL spokeswoman Jaymelina Esmele said.

AOL has offered Web-based e-mail for many years, but the service has been restricted to subscribers. The new move is part of an AOL initiative to offer more free services to public Web users, an expansion that would help the Time Warner division's efforts tap the online advertising dollars that have fueled revenue growth for Yahoo, Microsoft's MSN and Google.

The "AOL Mail on the Web" site has more features than the previous members-only incarnation, in the version seen by CNET News.com. The revamped interface resembles Microsoft's Outlook, where e-mail messages can be organized into folders. Like rival Web e-mail services Yahoo Mail and Hotmail, AOL's software includes address book contacts, a message search bar, spam controls and signatures.

Mirroring its competitors, the product will include hefty storage with a limit of 100MB. After Google's Gmail launched with 1GB of storage, Yahoo and Hotmail upgraded their own services and now offer 250MB for free users.

Other AOL Web e-mail features include the ability to use "rich" text options, such as different fonts and colors.

AOL's push into the public Web e-mail realm comes as the online giant faces staggering defections from its core dial-up service to the faster broadband connections offered by cable and phone companies. Over the past two years, AOL has lost 4 million subscribers, for a total of 22.4 million defections.

The company has restructured its executive ranks by splitting its Web-based initiatives from its Internet access businesses. Earlier this month, the company laid off about 750 employees, mostly from its Dulles, Va., headquarters.

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