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The “Hotmail” Evolution

Today over 300 Million users, Windows Live Hotmail has truly transformed from a nascent idea to an email heavyweight. This article is about hotmail evolution.

This article briefly describes the historic evolution of one of the first web based email services that grew virally to reach tens of millions of users on Internet to eventually become the reigning web based email service of that time and got finally sold to Microsoft for $400 Million.

It was way back in mid 1996 when Sabeer Bhatia and Jack Smith, two colleagues at FirePower Systems Inc. envisioned a free web based email service, which would provide an easier and lightning fast way of communicating online. They named it Hotmail(they termed ‘HoTMaiL’ based on HTML, the primary language for creating webpages). Below is an archived screenshot of Hotmail in the year 1996

hotmail evolution

At the very early stage, Hotmail was innovative enough to secure a seed funding from Draper Fisher Jurvetson(DFJ), a Venture Capital firm. Today, DFJ proudly flaunts early stage investments in popular services such as Overture(acquired by Yahoo!), Skype(acquired by eBay) among others. Soon after getting funded for the initial growing phase, Hotmail boomed in terms of email market share. Below is an archived screenshot of Hotmail in the year 1997(before getting acquired by Microsoft).

hotmail evolution

It was 1997 when Hotmail had transformed into a ‘Hot property’ over internet and several corporate giants were quite interested in acquiring Hotmail. As the biggest software giant of that time(Microsoft) was too eager to buy Hotmail, top executives from Microsoft went through multiple meetings with Sabeer Bhatia, the CEO & president of Hotmail, to negotiate on the acquisition quote. Bhatia was daring enough to walk away from alluring offering of $150Mn and even $350Mn from Microsoft. Bhatia finally settled the deal for a whopping $400Mn. Below is an archived screenshot of Hotmail in 1998, after getting acquired by Microsoft(Notice ‘Hotmail’ logo getting transformed into “MSN Hotmail”).

hotmail evolution

The growth of ‘MSN Hotmail’ flourished under Microsoft so well that the overall userbase grew from approx. 9 Mn users(at the time of Hotmail’s acquisition) to over 30 Million users by early 1999. Then came the era of ‘Dot com bubble’ which crushed tons of ‘dot com companies’ within no time.

At that time, the email industry heavyweights, Yahoo Mail! and MSN Hotmail were less worried about ‘innovation’ and more bothered about managing to keep up with their web based revenue projections from their respective email services. It was a long period of silence when hardly any exciting came up from either Hotmail or YahooMail. Below is an archived screenshot of MSN Hotmail in the year 2001.

hotmail evolution

It was in the year 2004 when Google officially released ‘Invite only’ Gmail service(Beta), an email service by Google, which offered more memory and better user interface, compared to both Hotmail and Yahoomail. This new competition from Google forced Microsoft to come up with new innovations in Hotmail. In response, Microsoft released upgraded version of Hotmail offering more space, better speed and other enhancements.

Microsoft didn’t want any competing email service to phase out Hotmail and therefore initiated developement work on their much enhanced email system from early 2005 itself. Beta testers of Microsoft’s enhanced email system kept on increasing, until the beta users reached millions (by brittany at tf online). In late 2007, Microsoft finally decided to roll out their new and enhanced email system to all of its 270 Million userbase. Microsoft rebranded “MSN Hotmail” as “Windows Live Hotmail” as well. Below is a screenshot of Windows Live Hotmail in mid 2008. There hasn’t been many changes since then.

hotmail evolution

Today, with over 12 years of innovation and close to 300 Million users, Windows Live Hotmail has truly transformed from a “nascent idea” to an “email heavyweight”

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