Yahoo! acquires Oddpost for webmail war

Online portal Yahoo! has agreed to buy Oddpost.com, a vendor of online email and news services, for an undisclosed sum.

The two companies confirmed Yahoo!'s plan to purchase Oddpost on Monday but disclosed few details about the buyout. According to a source familiar with the acquisition, Yahoo! paid close to $30m for the company. Oddpost's 10 employees, based in San Francisco, will now report to Yahoo's Sunnyvale headquarters.

"The acquisition of Oddpost provides Yahoo! with outstanding technological expertise, which will be brought to bear on products across the Yahoo! network, such as Yahoo Mail," said Yahoo! spokeswoman Mary Osako.

In a document posted to its website, Oddpost told members it would continue to operate existing email accounts but said the company will focus on helping Yahoo! produce a new version of its online email service. Existing Oddpost members will be migrated to Yahoo! when the portal's next webmail update is introduced, according to the document. The announcement did not give a date for the debut of the new Yahoo Mail release.

The Oddpost acquisition underscores the recent surge in competition among providers of free email services. Yahoo! is fighting for business against such rivals as Microsoft's Hotmail service, and is preparing for the entry of a promising new contender - Google's Gmail system. Gmail promises users 1GB of storage, which in June led Microsoft to pledge to raise Hotmail's free email storage limit from 2MB to 250MB. Yahoo! upgraded to 100MB for free users and 2GB to paying email customers.

Like Microsoft, Yahoo! attempts to use its free webmail to lure users to pay for additional online services, such as expanded memory or the ability to manage multiple email accounts from a single interface. But since its founding in 2000, Oddpost has existed somewhere between those free services and the more expensive email software marketed by Microsoft and others. For $30 per year, Oddpost has offered 50 megabytes of online email memory, along with spam filtering tools and daily news aggregation. The service also offers some of the more advanced features of shrink-wrapped software like Microsoft's Outlook, such as automatically generating frequently used email addresses as they are typed into new messages.

Oddpost, which has maintained a humorous and decidedly anti-corporate image, attempted to assuage concerns among its members that it was "disappearing into the bowels of corporate America" as a result of the acquisition.

"Our technology will flourish like a palm tree and/or IT professional's waistline in Silicon Valley," the statement promised. "While the glory of Oddpost has, thus far, been witnessed by the eyes of an enlightened few, soon it will be savoured by millions."

Matt Hines and Stefanie Olsen write for CNET News.com. Jim Hu contributed to this report.