Retro Tech

P.S., I Love You: The Hotmail Story

July 4, 1996 changed the internet, marking the launch of a free web service that would connect billions

Retro Alex

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Former Apple employees Sabeer Bhatia and Jack Smith launched a new project, Hotmail, on July 4, 1996. This date was a nod to independence—the freedom from being chained to a single internet service provider or computer to access your emails. Instead of sharing an email address with the family or tying it to a computer or ISP, each person could have their own email account, free of charge, and access it anywhere.

Starting with the basic tools to craft and keep emails, Hotmail’s inventiveness lay in its use of HTML. Other email services at the time required a desktop application. In fact, Hotmail cleverly included ‘HTML’ in its name, showcasing its web-based roots right in its brand: “HoTMaiL”. It was like a little digital DNA code, spelling out its identity.

This service offered a whopping 2 MB of free storage. While that might seem tiny today, it was a big deal back then. Bhatia and Smith didn’t know it at the time, but the launch of their project was the starting pistol for the race to connect the world, one email at a time. Within 18 months, Hotmail had 12 million members.

Hotmail’s User Base Soars with the Web’s First Viral Marketing Campaign

The first online viral marketing campaign

When Hotmail launched in 1996, email was still a novel concept to many, and free web-based email was virtually unheard of. Bhatia and Smith sought an inexpensive but effective way to spread the word about their groundbreaking platform. They came up with an idea that was both simple and brilliant: to append a tagline to every email sent out from a Hotmail account that said “P.S. I love you. Get your free e-mail at Hotmail.”

This signature line played a crucial role in Hotmail’s viral marketing campaign. Every message sent by a Hotmail user automatically included this friendly, personal sign-off, which served as a call-to-action for others to sign up for their own free Hotmail account. The phrase “P.S. I love you” was memorable and evoked a sense of friendliness and personal touch, resonating with a wide audience and prompting curiosity about the service. With every email sent, Hotmail was effectively reaching potential new users, tapping into the power of word-of-mouth marketing before social media made it a norm.

This promo method drove exponential growth. Within a year and a half of its launch, Hotmail had acquired tens of millions of users, and the “P.S. I love you” signature had become an iconic phrase associated with one of the internet’s earliest success stories.

Hotmail’s marketing strategy set a precedent for future online services to consider inventive, low-cost marketing tactics. The “P.S. I love you” campaign is a testament to the power of simple, direct messaging and remains a notable viral marketing case study.

Microsoft Takes Notice

Microsoft saw Hotmail’s potential—not just as an email service but as a gateway to the internet for legions of users. By the end of 1997, Hotmail had attracted 9 million members. On December 31, 1997, with a winning bid of around $400 million, Microsoft clinched the deal. This acquisition was an investment in the future of internet communication.

Money talked, but the vision soared even louder. Microsoft envisioned Hotmail as an integrated service that could reach the far corners of the internet, connecting people with a suite of services under one umbrella. Hotmail, with its vast user base, was the perfect vehicle to drive this vision forward.

Hotmail Faces Security and Competitive Threats

It wasn’t all smooth sailing, though. Hotmail faced challenges just like any early web company. In 1998, Microsoft confirmed that unauthorized parties may be able to breach Hotmail’s password security. When they announced this threat, Hotmail had not yet been patched. Instead, Microsoft shared, “Hotmail is devoting significant resources to fixing this and will do so as quickly as possible.”

Security companies pointed out that senders could embed a snippet of JavaScript code that renders a page looking like the Hotmail login page. It was all a phishing attempt. And many users in 1998 fell for it.

Source: Wikipedia.org

In 1999, another vulnerability was alleged: hackers claimed they could use a script and log in to any Hotmail account using the password: “eh”. These security vulnerabilities seem unheard of today, but they were not uncommon across the nascent web of the ’90s.

Additionally, Hotmail quickly found itself amid a rising tide of competitors. Yahoo! Mail and AOL became new entrants, challenging Hotmail to innovate or risk being left adrift. In response, Hotmail bolstered its service. It increased storage and introduced functions that let users send larger attachments. Spam filters were also improved.

As the battle raged on, it became clear that Hotmail couldn’t just keep up; it had to lead. Staying afloat was not enough. And it would only get harder.

Gmail Launches

My Gmail account the day I received my invite code

By 2004, Hotmail had attracted a user base of 170 million users. It was the ubiquitous name of webmail. But in Microsoft’s and Yahoo’s quests to compete with Google on search, Google was striking back.

There were rumors circulating that Google was preparing to launch a free webmail service to compete with Hotmail. While Hotmail offered free access and charged a monthly fee for higher storage options, no one—not even the rumors—predicted what would happen next.

On April 1, 2004—in what seemed like a practical joke—Google launched Gmail. Gmail offered users 1,000 megabytes of free storage, which was more than 100 times what Hotmail offered for free.

The new platform gave users better tools for email management. It introduced powerful search capabilities and grouped email replies into threads. Email felt manageable again.

Gmail’s initial user attraction strategy was simple yet genius, just like Hotmail’s. It used exclusivity to create demand. Invitations to join were coveted, creating buzz and a sense of privilege around opening a Gmail account. Hotmail had another serious competitor.

Hotmail’s Evolution to Outlook

Internally, Hotmail’s innovation engine was slowing down. Its features, once groundbreaking, now seemed ordinary. Attempts to revamp Hotmail often resulted in complexity rather than improvement.

Meanwhile, Hotmail’s integration into Microsoft’s Windows Live brand felt like two different puzzle pieces were forced together, leaving users with a disjointed experience. The Windows Live era brought confusion, with frequent rebranding that muddled Hotmail’s identity.

Through this period, Hotmail was renamed from Hotmail to MSN Hotmail, then back to Hotmail, then to Windows Live Mail, then to Windows Live Hotmail, and finally Outlook.com.

In 2012, Microsoft launched Outlook, giving every Hotmail user an @outlook.com account. With this migration, Outlook had more than 400 million users by 2013. This launch would set the stage for Microsoft’s later venture into Office 365.

Hotmail’s Legacy

Hotmail showed the world how to send email without software installations. With its launch in 1996, Hotmail revolutionized email by making it universally accessible from any internet-connected computer.

The service expanded email’s reach, connecting users across different platforms with simplicity and speed. It also spearheaded features like a free service model and generous storage.

As user numbers soared, Hotmail integrated spam filters and virus scanning, understanding that an email service must not only be easy but safe. When Microsoft acquired Hotmail in 1997, at a price of $400 million in 1997, it was a clear endorsement of email as an indispensable tool.

Hotmail’s influence persisted even as competitors emerged and technology evolved. It set standards for what users expect from email services: accessibility, reliability, and continual innovation.

Today, with hundreds of millions of active users, Outlook carries Hotmail’s legacy forward. It demonstrates how early internet pioneers like Hotmail laid the digital foundation for communication tools we consider essential today, showcasing the transformative power of the web.