Products Vs. Services On The Internet - What's The Difference?

When you're offering something on the Internet - should we call it a 'product' or a 'service'? Traditionally, a product is something that you can physically touch while service was something that you'd do using your skills and efforts in exchange of money. But on the Internet - everything remains in the virtual world - so how do we distinguish between a service and a product on the Internet?

Take Gmail from Google for example. Should we call it as a 'product' or a 'service'? I think 'service' could be the most appropriate word in the Gmail's context because it lets you manage your electronic mail on the Internet. Take Facebook - the social network. I've heard a few people call it a 'product' launched by Facebook Inc. and there can be equal and opposite argument about Facebook being a service.

So is everything a 'service' on the Internet?

That's an important question, I think. Is it that 'products' do not exist on the Internet and is everything a 'service'? I'd like to hear from you.

Product Companies Vs. Services Companies On the Internet

There's always a discussion about disappointing number of 'product' companies coming up from India in the IT space. When asked to name a few product based companies, people would name Google, Facebook, FourSquare, GroupOn etc. But what these companies offer are all 'services' and not 'products'.

The term is confusing. I look forward to your opinions & thoughts on the same.