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Your blog title needs to be 11.785 times stronger than the competition. Or maybe 12.785.
Great points as we're looking to launch our first product in the next two months.

Helps us to aspire to a higher standard.

Was gmail really 10x better for the average user? I still use my hotmail address (though I use gmail provided through google apps).

I thought the success of Gmail was due mostly to the hype and the perceived rarity of having the address at the time.

People don't seem too averse to changing emails. I suspect the growth of .mac emails has increased about on par with the growth of Apple market share over the last few years.

When Gmail first came out, Hotmail had a piddly inbox size limit of 4MB. I remember having to clean out email quite frequently.

So, for me, Gmail was more than 10x better, just because of the 1GB size limit.

Compared to the average free webmail service out there gmail was easily 10x better at launch. The quantitative storage size increase was really a qualitative change removing the need to prune old/unneeded emails, which was a frustrating and time consuming task with the web interfaces of the time. Moreover, the heavy use of AJAX in gmail transformed webmail from a clunky second class citizen to a fully capable first class email UI (at least for personal mail). The addition of super fast full-text search pushed gmail over the top.
How is hotmail's current spam filtering? From my experience with other web email, gmail's filtering is second to none.
I haven't noticed a difference between spam from either my hotmail or gmail addresses, so I'd say they probably have it pretty good.
Why not 5x, or 15x? How do you quantify how much "better" one app is than the other? That, to me, is the hard part. Instead of aiming for 10x, continuously and incrementally improving your product until it reaches the threshold will suffice, especially since that threshold will vary widely depending on what kind of product you have.
I totally agree, without an actual means of measurement of "how much better" these multipliers seem to be useless. Also, often it is one or two key features that distinguishes one product from another. For me, Gmail's "how much better" was the better storage and the fact that conversations are organized better.
Don't settle for being better than your competition. 10x better may not even be enough to oust a strong leader. Instead, invent a new category for your product to be the best in.

For example, you can make an operating system 10x better than Windows, but Windows can still have the lion's share of the market. Instead, make a new category of operating systems: operating systems for a new type of computer (iPad) or turn the browser into an operating system (Google Chrome).

In other words, if your competition is playing a winning game, don't play their game. They've already proven they are winners at it. Invent your own game.

broad generalization - cost of switching varies GREATLY depending the type of service.
I don't agree with this statement at all. Look at how many photosharing sites there are. Are you saying on Flickr or Photobucket can have viable businesses and the rest should just keep over and die. There are tons of nice little "Italian restaurants" of photosharing on the net that can have perfectly viable businesses. Look at SmugMug.

Another example is video sharing sites. By your statement, if you are not Youtube or looking to be 10x better than YT, you should just call it quits and forget it, but look at all the other video sites - CollegeHumor, Justin.tv, Vimeo, etc.