March 29, 2007

Unlimited Is the New Black

Earlier this week, Yahoo! made headlines for eliminating any restrictions on its Yahoo! Mail users. (Coverage: GigaOM, Richard McManus, Jeremy Zadowny)

Previously capped at 1 gigabyte of storage apiece, trailing Google's GMail offering, which queued up 2.8 gigabytes of e-mail space, Yahoo! took the plunge by moving to an unlimited model, in a hope of capitalizing on its strong user base, and possibly to start getting attention away from Google, who has been the assumed technology leader since the company's debut.

The move away from limited to unlimited has been seen time and again in the technology space. After all, it wasn't all that long ago that AOL and other dial-up ISPs charged by the hour you were logged on.

When AOL did switch away from offering hundreds of hours a month on widely distributed CD-ROMs, and moved to unlimited, it was a major change. You may remember that AOL in the first days of the promotion went almost completely inaccessible as the most hard-core users would dial in and never hang up, or set up autoscripts that would artificially keep them logged in after periods of inactivity.

The move from metered to unlimited is also taking hold in traditionally penny-tight industries like cellular phone service. While most plans offer several hundred minutes a month, others, including MetroPCS, are moving to basic monthly fees, regardless of usage. The business model there assumes that most won't exceed a certain threshold, effectively overpaying for the minutes they actually used, while the busiest of users won't bankrupt their provider.

On the Web, unlimited makes sense. Web hosting providers typically limit their customers to a standard amount of capacity space, and megabytes of data transmitted per month. But on the most popular of days, sites may be brought down because they had unforeseen traffic. That's like punishing your most successful customers. (See: Tom Foremski of Silicon Valley Watcher)

I expect that the Web providers who will win will offer unlimited accesses and capacity, and those offering limits will only be limiting their own potential growth. That Yahoo! saw this trend, and wanted to be part of it, is smart. It doesn't mean I'll ditch my .Mac e-mail address for Yahoo! Mail any more than I did for GMail, but some might.