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GMail has a pretty obvious source of revenue. But more importantly it's hugely strategically valuable. GMail is the #1 reason for people creating Google accounts. Google has a clear desire to have people signed in when performing searches and it lowers the barrier to adoption for it's other products such as Google Plus, Google Docs, etc.

GMail does make some direct revenue for Google (ads and paid storage), but it was (and probably still is) their #1 method for onboarding users to the Google Accounts system. And that gets them access to pay for all sorts of Google products. GMail has been key in growing Google's active user base.

AIM has been integrated in Gmail since 2007.

http://gmailblog.blogspot.com/2007/12/gmail-chat-aim-crazy-d...

You can unfortunately no longer log into an AIM account in Gmail and have those contacts appear like in the blog post you linked to. They got rid of that feature a couple years ago.

Bait and switch.

The "cloud" really replaced "desktop computing"... And by cloud i mean Google and desktop Microsoft. But you knew that.