I agree - people are no longer willing to pay for the little bit of the client that connects to a server, downloads the email, and renders it, because all of that is widely available for free.

What they are willing to pay for is a value proposition that goes beyond the mere mechanics of email. Outlook succeeds because it integrates email with calendaring (so does GMail, with less success), does a fantastic job with sortation, filtering, and highlighting, and also is a champ when dealing with unmanageably large address books.

The market for an amazing email management service is absolutely existent. The market for a rubber-stamp me-too mail client is not.