How Hotmail changed Microsoft (email) forever

On December 29, 1997, Bill Gates bought Hotmail for $450 million dollars. Widely known as the largest purchase of that time, it enabled Microsoft to rule the world of Web-based email during its initial years.


Former Microsoft executive Marco DeMello, responsible of managing the integration of Hotmail with MSN recalls the meeting with Bill Gates – “He gave me and my team the mission of basically finding or creating a system for free Web-based email for the whole world that Microsoft would offer”.


Previously known as “HoTMaiL” (with reference to HTML) and despite its ugly start with the trouble of spam emails, Hotmail laid the groundwork for the future email service providers. It influenced changes in Windows, seeking the evolution of Windows Server, further making steps toward the foundation of the Azure cloud.

Why was Hotmail Purchased?


In 1994, Hotmail and its rival, RocketMail (now, Yahoo Mail) were the first to offer free, Web-based email funded by advertising. By 1997, Hotmail had already acquired a whopping 9 million users.


DeMello quotes “We could not build our own Web mail service in the time that Bill [Gates] had specified. At last, “Bill wrote a check for $450 million in cash,” “And I was given the responsibility of integrating that system and scaling it within Microsoft.” said DeMello.

Migration Issues


To integrate Hotmail with Microsoft Servers, software running on Unix i.e., a mix of FreeBSD Web servers on the front end and Sun Solaris on SPARC on the back-end, had to be incorporated into a Windows-only environment.


There were several issues to consider, from security to memory management and the TCP networking stack itself was difficult for migration.

Then gradually, Windows 2000 Server was developed and DeMello’s team worked with Windows NT architect Dave Cutler and crew making the transition successful.


Hotmail was a test bed according to DeMello words because Windows’ Web and Internet services component builds tested the development of IIS, bonding the relationship between Microsoft’s server-development team and the Hotmail team for years.


Hotmail establishment empowered Microsoft with “eat your own dog food” experience,

helping with the set up of Azure Cloud and other global Web-services.


Even though the migration to Windows Web servers happened much earlier, only in 2004, was the backend system of Hotmail i.e., the database servers and storage were then moved to Windows Server and SQL Server.


The Office platform had a positive impact due to Hotmail.

Many companies tcs degions like When Hotmail was acquired, within a few weeks Outlook arrived. The next version, Outlook ’98 had to be tweaked to collaborate with Hotmail resulting in incompatibilities of protocols. Outlook uses MAPI as a protocol.

The Hardships


It took three years for the migration from Solaris to Windows.


To store all the data pertaining to the mailboxes of all Hotmail users, data centers were set up to scale the storage and compute demands.

The setup had proven to be expensive at the expense of power crunches and infrastructure cost.
Hotmail had its first big security breach in 1999. All the 50 million accounts were compromised by a bug in a script on Hotmail’s servers, entitling access to any Hotmail account with the password: “eh.”

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Hotmail uses Secure HTTP (HTTPS) with an SSL encryption to secure the login credentials of users.

While customers had to use complex passwords with a length limit of 16 characters and adhere to better password policies, unencrypted HTTP, although not SSL was used to run the rest of the services.


Therefore there was also a possibility that your Hotmail messages could be read by someone by stealing the Web traffic after logging in.

The End of Hotmail


Competition from Google’s Gmail and from Yahoo put efforts on Hotmail for improvement.

Hotmail was renamed ‘Windows Live Mail‘. But Hotmail users were confused, so they changed it again to ‘Windows Live Hotmail’.

Microsoft began modifying the front-end systems for Hotmail, changing Solaris code in C++ and Perl to C# and ASP.NET code, ending the legacy of Hotmail’s Unix. Hotmail helped in building the foundation of Office 365 platform and the Azure cloud.


It could not contribute much revenue and Hotmail users were the target of jokes and public hate for some time.


One management consultant commented that Hotmail users should never be hired. Hotmail was often used for fake dating profiles, burner accounts and its users were an easy target for phishing and spam download attacks.

Its spam filtering capabilities were unworthy. Hotmail accounts were blocked as spam as Hotmail couldn’t classify spam emails.


We should not forget about the importance of Hotmail after all these years. Outlook easily replaced Hotmail with a positive ray of hope.
However, thousands remain who are still lazy to discard their Hotmail email addresses.

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