Yahoo and Google, according to a New York Times article by Saul Hansell, are independently both planning to use the information from their popular mail services to design social networks around users’ personalized home pages.

Email address books are the most prized import of any social network because they are viral marketing gold. Web companies are cheap to build and have few barriers to entry, which means that users in absolute number and user growth (often measured in “doubling time”) are key metrics or indicators to investors of a potentially successful web company. You can’t just design a sweet looking site and expect that to be a strong enough indicator of your long term potential– investors won’t buy it and want to see more user data. Assuming a monetization strategy of advertising, this makes a lot of sense because ads are generally priced at CPM (cost per thousand page views) or CPC (cost per click), and more users on the site means more eyeballs to view or click those ads. The point here is that as soon as your users start importing their address books, you will have see “viral growth” where one new user turns around and adds all of their contacts (10s, 100s, or 1000s). You can imagine that this will quickly increase your number of users and give you an attractive growth rate if a high enough percentage of users are doing this.

This is all to say that Google and Yahoo already have that data and a little more. Not only do they have all of the names and email addresses of your contacts, but they even know who you communicate most often with and what times of group threads exist in your inbox. Suffice it to say that they have the potential to create a virally driven social network.

But do people want one more social network out there? In addition to Facebook, MySpace, LinkedIn, Orkut, Ning, Friendster, Tagged, ConnectU, 43 Things, among many others, is there room for one more? If it were any other start-up probably not, but with the information that Google and Yahoo already have through email contacts combined with the fact that users are checking their iGoogle and MyYahoo home pages daily, I think there’s certainly room for one (or two) more.

Update: Read Michael Arrington’s post on TechCrunch for an opposing view on Yahoo’s repeated and failed attempts to enter the social networking space.