Hotmail was an industry-changing webmail provider when it debuted on July 4th 1996, providing free email accounts that could be accessed from any computer around the globe. As one of the first services to offer unlimited free storage space, it became extremely popular worldwide. Founder Sabeer Bhatia & Jack Smith Sabeer Bhatia and Jack Smith created Hotmail as a free Internet email service in July 1996. Over time it gained prominence, eventually being purchased by Microsoft for an estimated cost of $400 Million US$. As of today it boasts over 50 Million registered users making it one of the leading e-mail services online. Launching a free web-based e-mail service was a revolutionary idea that quickly took root among Internet users, replacing costly dial-up accounts. Users could read and send e-mail from any computer connected to the Internet. Sabeer and Jack first thought up the idea for free e-mail accounts while employed at Apple, where they both worked at that time. Their frustration stemmed from having access to personal e-mail accounts blocked by Apple's firewall; thus leading them to create the plan of providing such free accounts to others as an innovative form of resistance against employers who didn't allow access. They decided to address this challenge by providing free e-mail accounts accessible over the Internet that could be password protected - eventually developing an immensely popular service which Microsoft purchased for an estimated sum of $400 Million in December 1997. Silicon Valley was abuzz with Indian success stories; and in 1998, these firms boasted 25 million active e-mail accounts - surpassing CNN, America Online and Seinfeld in user growth. Hotmail stood out from its competition due to a combination of innovative technology and an iconic brand. As one of the first services offering unlimited free storage space, Hotmail became one of the most beloved online services over time. As time passed, Hotmail lost some of its original charm, leading to Microsoft replacing it with Outlook in 2007. While this change was significant, it also took away from some of its initial appeal when launched. Sabeer attributes great companies' innovations to finding solutions to needs which also transform society. He notes that breakthrough ideas come from individuals able to view problems differently; Google was one such breakthrough company which tackled search efficiently before any competitor. Launch Date July 4th 1996 Hotmail was one of the earliest web based email services to hit the market, first debuting on July 4th 1996 and opening up access to your emails anywhere with access to an internet connection and computer. At that time it represented freedom from ISP-based accounts while offering access to your messages wherever in the world you were located. Hotmail remains one of the most widely-used free internet email services available today and boasts an estimated total user count of 8.5 million by 2013. Microsoft is currently trying to transform it into something similar to Facebook, where users can post status updates and photos, chat with friends or family, play games, read articles and watch videos - in other words a virtual social networking and gamification experience! They have even employed cutting edge social networking and gamification technologies that make the service engaging and useful - hoping this will resurrect its once great free email service while giving it an edge against competition online. They are currently testing it with beta testers with promising results already emerging! So keep an eye out, because Microsoft may just make a comeback soon enough! So stay tuned, because Microsoft could just transform this once great email service! Microsoft Purchased Hotmail in December 1997 Hotmail was acquired by Microsoft in December 1997 as one of the pioneering email services online and quickly become one of their flagship businesses online. This acquisition proved immensely successful for Microsoft and led to significant adjustments in how it approached web-based operations. Since Microsoft acquired Hotmail, it has gone through two distinct iterations; initially becoming MSN Hotmail before transitioning into Windows Live Hotmail for a major revamp that fully integrated all Microsoft software suite applications. Service was further strengthened when MSN linked it with their platform and saw growth to 50 million users by summer 1999, which allowed additional funding rounds and investments into new development. Microsoft began to focus on security and spam prevention as well. They adopted the controversial Mail Abuse Prevention System (MAPS) and eventually implemented a $5 per message fine for unsolicited emails sent through their service. Though Hotmail was established as an effort-free zone, its services still experienced challenges. Outages and hacker attacks occurred frequently; Hackers Unite disclosed vulnerabilities within Hotmail systems in August 1998. By the end of 1999, Hotmail had amassed more than 30 million users worldwide and overtaken America Online (AOL) as the world's most popular email service. To meet demand, Microsoft implemented a full redesign of Hotmail platform in April 1999; increasing server capacity while revising terms of service to penalize spammers with a $5 fine per message sent out. Hotmail experienced rapid expansion and popularity, prompting an unprecedented increase in advertising revenue. At its height, Hotmail earned over $1 billion from this source alone - becoming one of the world's biggest advertising-supported email services at that time. Google launched Gmail as a direct competitor to Hotmail in 2004 and quickly overtook it in terms of features and performance, prompting Microsoft to move Hotmail users over to Outlook which featured an improved codebase developed within Microsoft itself. Microsoft Updated Hotmail in 2007 Microsoft's latest upgrade of Hotmail marks one of the biggest advancements since its creation - packed with features designed to deliver an enjoyable, secure, and productive e-mail experience whether accessed over the Web, via an e-mail client application, or mobile phone. Windows Live Hotmail's speed and performance have been enhanced through customer input combined with HPC capabilities of the company, so as to meet modern mobile devices and bandwidth intensive Internet connections. In addition, it will feature an updated user experience as well as a revised UI to match. Engineers for Microsoft are working tirelessly to equip its new-gen with all of the features and functionality it needs to remain relevant in an increasingly competitive market. Recently, as an added incentive, Office 365 beta made Microsoft Office Outlook free and accessible to Windows 7 and Vista users alike - marking the first time ever that their email would come directly from desktops instead of servers.