Google is more than just a web search engine:
Rob Pike has gone to Google. Yes, that Rob Pike—the OS researcher, the member of the original Unix team from Bell Labs. This guy isn't just some labs hood ornament; he writes code, lots of it. Big chunks of whole new operating systems like Plan 9.
Look at the depth of the research background of the Google employees in OS, networking, and distributed systems. Compiler Optimization. Thread migration. Distributed shared memory.
I'm a sucker for cool OS research. Browsing papers from Google employees about distributed systems, thread migration, network shared memory, GFS, makes me feel like a kid in Tomorrowland wondering when we're going to Mars. Wouldn't it be great, as an engineer, to have production versions of all this great research.
Google engineers do!
And how Google can offer 1 gigabyte of storage per email user:
A pack of 20 300GB drives can probably be driven down to around US$5000, so, even accounting for minimal expense on RAID, we're looking at roughly US$200 million in hardware costs. Yeah, it's a gross exaggeration, since I've not factored in oversubscribing (which probably shrinks the required disk capacity to 30%) or made a real attempt at estimating other costs rather than the disks themselves - let's say things even themselves out and it can be done at half that (US$100million).
And this is pure speculation, but something to keep in mind:
This page is not meant to be an analysis of Gmail, but while you are at it, please read the privacy page and the terms-of-use page for Gmail. Note that if you delete an email, Google may mark it so that it is invisible to you, but might not really delete it. And if you terminate your account, Google does not guarantee that they will erase your emails. Google decides what to delete and when, not you. It's none of your business.
While Google brags that no humans will read your emails, the entire Gmail program will involve extensive automated profiling of you as an individual. Google will be sharing the non-identifiable portions of your profile with anyone they choose. If the ownership of Google changes, or there is a merger, the entire personally-identifiable profile will be available to the new owners or partners.
Finally, it's all available to government officials all over the world, under whatever legal procedures are used in any particular jurisdiction. It is also available to civil litigants under discovery procedures authorized by a court. When you look at it this way, the one-gigabyte allowance for your email account becomes much less attractive.
Google never deletes anything they collect, as far as we can tell. Think twice before typing in your email address on a Google form.