The California-based company launched overnight a test with about 1,000 invited guests set to try out a new e-mail service called "Gmail."
Google, which made its name in search but has added numerous services, such as a news aggregation page and a newsgroup interface, says that Gmail is search-based e-mail.
Like Yahoo Mail and MSN Hotmail, Gmail will let users search through their e-mail. Unlike those competitors, though, Google will offer enough storage so that the average e-mail account holder will never have to delete messages.
Hotmail currently offers 2MB of free e-mail storage. Yahoo offers 4MB. Gmail will dwarf those offerings with a 1GB storage limit.
Google plans to make money from the service by inserting advertisements into messages based in part on their content, effectively extending its AdWords program for presenting contextual ads in Web pages to e-mail.
"The idea is that your mail can stay in there forever," said Wayne Rosing, vice president of engineering at Google. "You can always index it, always search it, and always find things from the past."
When asked whether Gmail represented further evidence that Google is muscling in on the turf of Yahoo, MSN and other Web portals, Rosing demurred.
"The way we'd like to say it," he said, "is that part of our mission is to organise and present all the world's information, and e-mail's part of that information that currently is not well organised. That is the rubric under which we offer this."
But one analyst said that Google's e-mail service should be able to siphon some consumers away from the company's rivals, given the level of storage and the proposed functionality.
"There is no doubt that [Google] will be able to take market share from Yahoo and Hotmail," said Hellen Omwando, an analyst with Massachusetts-based Forrester Research. "You also have to consider that most people now maintain more than one e-mail address, so it wouldn't be surprising to see [Gmail] grow quickly."
But some consumers may be turned off by the contextual advertising system, Omwando said. Google has indicated that it will use an automated system to scan for frequently used terms in creating its contextual ads, with some intervention from humans to censor or adjust certain keywords.
"Google will have to tread carefully with this concept as people tend to use Web-based e-mail accounts for personal activity," she said. "Advertisers might be skittish at first and wait to see of the idea is accepted before jumping onboard."
The analyst also pointed out that, although Gmail remains in a beta format, the service does lack some functionality offered by rivals such as Yahoo, such as the ability for users to access multiple e-mail accounts from one central account.
Google is wary of announcing a launch date for the service until beta testing is complete, but according to Kate Burns, managing director of Google UK's ad sales, it will be widely available to consumers fairly soon.
"My feeling is that we have already done an awful lot of testing, so it will be a limited test period -- a matter of weeks," Burns said.
News.com's Matt Hines and Michael Parsons of ZDNet UK contributed to this report.