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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”



  1. Aman Nagra

    June 22, 2009 at 10:36 am

    gud compilation of facts

  2. Siraj

    July 1, 2009 at 11:04 pm

    In-depth analysis done…carry it on

  3. Rodrigo

    July 16, 2009 at 2:28 pm

    Have mine since 14 November, 1996….some people say they’ve got theirs since 95…that’s not possible, is it?

  4. David

    March 20, 2010 at 10:35 am

    You mean “lightning fast.” Not “lightening” fast.

    • Prashant Sharma

      March 20, 2010 at 11:45 am

      oh yes, “lightning fast”..that was a typo…thanx for notifying that btw 🙂

  5. Hannah Hall

    August 2, 2010 at 9:30 am

    Venture Capital is always risky but if market research had been done correctly, you will earn a lot;*”

  6. Cesar

    August 12, 2010 at 8:31 pm

    Regarding this All-New 2010 Hotmail…
    1.- I don’t like the new eenie-meenie-tiny-smaller font; I have to keep zooming with the IE Zoom in order to try to read the different subjects in my inbox or junk folder, and my computer runs with Windows 7 on IE8 with a 1360×768 screen resolution on a 32″ inches 16:9 ratio, LCD-Full HD, LG screen!
    2.- Once you select over 10 junk mails and trying to mark those as “Phishing Scam” for a quick deleting, it keeps coming with an error message over and over and not deleting any!
    Then you just have to manually delete each one separately consuming my time and patience!
    My Junk folder keeps clogged because I receive over 50 junk mails per day!!
    3.- Once I try to read a message in my Inbox it starts showing previous or future replied messages instead of the one that I ACTUALLY want to read!
    It’s very confusing and tiresome to check all those different messages and dates that comes up at once when you’ve been exchanging comunication with those emails with another user!
    4.- On and on I still LOVE the Yahoo! Mail because it allows me to open each separate letter in a different tab -Inside the same IE tab that I’m already in my Yahoo! mail- for a quick check of different emails from different contacts, dates and conversations instead of just one SINGLE window as in Hotmail!
    When I try to do that in Hotmail: I have to keep opening NEW IE windows for checking the “Sent Folder” for a different email and date while opening ANOTHER different IE window for trying to type a new message or actually checking another mail in the “Inbox Folder”!
    It kills time and it’s far from the versatility of Yahoo! Mail multiple tabs in the SAME single window!!
    5.- I’m aware Hotmail is shifting gears, but it’s really annoying when some times you try to log off from your Hotmail account for someone else to try to check his Hotmail account: It only keeps popping the previous account on the LAST letter you just read!
    No matter if you close that tab and wait for a while or even try to open an entirely new window; Hotmail keeps doing that: Showing the last letter you’ve read when you already log off!!
    Hopefully this could be read by any Hotmail Guru at Almighty Windows!!
    Thank you!


  7. Guti

    October 12, 2010 at 3:30 am

    I got my on july 1997, so a year after its founding.
    Probably I will be into the firsts users on Hotmail.

  8. bill

    November 11, 2010 at 8:16 am

    It was in the year 2004 when Google officially released ‘Invite only’ Gmail service(Beta), an email service by Google, which offered more memory…

    More memory you say?

  9. Noel

    February 18, 2011 at 3:52 am

    I was still at University/college in 1993 and seem to remember my friend showing me hotmail so 1996 seems bit late to me as date hotmail was launched.

    Maybe it was under prototype for a few years and once they knew it was going to be a hit it was launched commercially.

  10. Noel

    February 18, 2011 at 3:53 am

    what i mean is, did it not exist in 1993?

  11. kominki

    August 18, 2011 at 5:49 am

    I’m not sure where you’re getting your info, but good topic. I needs to spend some time learning more or understanding more. Thanks for magnificent info I was looking for this information for my mission.

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