In the face of an ever increasing space-to-pricing ratio in the storage world, Google is going to take the fight outside its borders and attack both the free and premium email accounts at Yahoo and MSN. When Gates says that hardware will be close to free 10 years from now, you can bet he's pondering all the ways Microsoft can leverage that (and still not get commoditized) and Google is playing the same game.

Bill and Matt are right, this could be highly disruptive, and might be the big move I was waiting for. Not only it can hurt competitors big time (Yahoo more than MSN) but they might even make webmail useful again, instead of a fly cather for those throwaway addresses you give to companies you don't trust. The question is, can Google be better than the competition on spam filtering (which in a new twist is embedding news items in its copy to look legitimate)? So far they've been struggling against spamdex, and email spam is an order of magnitude more brutal. And if Google can make email useful and productive again, now that's something. Unlimited storage and good search means a huge barrier to exit. Throw in a wizard or two to import and clean up existing email sent from a Yahoo account, and the consequences on the competitive landscape boggle the mind.

Update: screenshot (real, as there are a couple fakes floating too). (More.)