Hotmail

In 1996, checking your email required a certain amount of logistical planning. You had to install software on your computer, configure server settings, and above all, remain tied to that machine to access your messages. Jack Smith and Sabeer Bhatia, two former Apple employees who had passed through Stanford, found this situation absurd. They wanted to read their emails from anywhere, without running up against their company’s strict firewalls. From this mundane frustration would emerge Hotmail, the first email service that could be used directly in a web browser.

The two partners pooled $4,000 in 1995 to build a prototype. The demonstration won over Draper Fisher Jurvetson, which injected $300,000 for 15% of the equity. But the money ran out quickly. A month before launch, the coffers were empty. Doug Carlisle threw them a lifeline: $100,000 in additional investment. Smith and Bhatia refused, fearing they would lose control of their creation. They chose to borrow instead.

On July 4, 1996, American Independence Day, Hotmail opened its doors to the public. The name played on the letters HTML, those four characters that structure web pages, by inserting them in capitals within “HoTMaiL”. The service offered 2 megabytes of free storage. That was small, but no one complained at the time. Bhatia’s real stroke of genius lay in a seemingly trivial detail: every message sent from Hotmail carried the signature “PS: I Love You” followed by a link to the service. This trick, which would later be called viral marketing, sent the numbers through the roof. One hundred thousand signups in less than a month, one million users in less than six months.

Microsoft observed this surge in power. By late 1997, Hotmail claimed 10 million users and captured a quarter of the webmail market. Bill Gates didn’t let the opportunity slip. On December 30, 1997, the deal closed for $400 million. Bhatia hesitated at first, not thrilled by the monopolistic image that stuck to Microsoft, but ultimately acknowledged Gates’s instinct.

Integration into the MSN galaxy accelerated growth. By early 1999, MSN Hotmail crossed 30 million users and registered 150,000 new signups every day. But this rapid expansion came with embarrassing setbacks. In 1999, anyone could log into any account by simply typing the password “eh”. Microsoft spoke of an “unknown security issue” and dismissed the possibility of a deliberate backdoor. Two years later, another flaw: a simple URL manipulation was enough to read someone else’s messages.

Google launched its Gmail service in 2004 with a gigabyte of storage, five hundred times more than Hotmail’s 2 megabytes. Microsoft responded by raising capacity to 250 megabytes and allowing 10-megabyte attachments. A complete overhaul of the service began, but the final version didn’t emerge from beta until 2007 under the name Windows Live Hotmail. These delays left the field open to Gmail, while Hotmail began to look like a dinosaur.

Microsoft then multiplied adjustments: Bing integration, compatibility with Firefox and Chrome, quick filters, automatic inbox cleanup. In 2010, the Exchange ActiveSync protocol arrived, followed the next year by aliases and instant actions. Despite these efforts, the service carried a tarnished reputation. Savvy users shunned it, spammers made it their favorite playground.

July 2012 marked a fresh start with Outlook.com. Microsoft abandoned the Hotmail name and offered a streamlined interface that contrasted sharply with the old version. Success was immediate: more than 10 million voluntary signups in two weeks. The migration of Hotmail accounts was completed in May 2013. Microsoft then announced 400 million active accounts. Users could keep their @hotmail.com address or switch to @outlook.com.

In 2019, a hacker exploited a security flaw to use a support agent’s credentials to access certain accounts. Dark mode also appeared that year, to save batteries and ease eyestrain.

Millions of @hotmail.com addresses remain in circulation, alongside @live.com, @msn.com, @passport.com, and @outlook.com. Hotmail’s story primarily tells that of a pioneering service, swallowed by a giant, which had to constantly reinvent itself to avoid disappearing into digital oblivion.