From the Internet Stock blog.

A bit of a context: April 1st is the one year mark since Google launched Gmail and forced the other players understand the different perspectives from the email business. Now Yahoo joins in realizing that email is sticky and generates tons of pageviews - after an intermediary offer of 250Mb accounts. David also says that MSN will be strategically forced to join in.

I think it is a bit late now, Yahoo can hardly use the second mover's advantages - I can't see people using Gmail switching back to Yahoo as the swicthing costs are high. Probably the offer will be beneficial for the ones that haven't already switched.

On the personal side, I only use the yahoo account for registering for crap things that probably would generate spam. I dumped my hotmail account long time ago. I actually learned that MSN has a 250 offer from my brother - anecdotically the offer is valid only for people located in the USA, so it's just as well.

My guess is that Yahoo's offer is somehow related to the newly launched Y 360 - integration is the name of the game. Btw, have you noticed that Yahoo Groups changed their look?

UPDATE: Almost forgot - don't miss OM's take on how Yahoo got its modjo back. Read and learn, it makes helluva sense.