Harshvardhan Mishra
On December 31, 1997, Microsoft announced that it had acquired Hotmail, the fast-growing, free web-based email service that had become a symbol of “email from anywhere.” The move wasn’t just a year-end headline—it was a strategic bet that webmail would become a core internet habit, and that email would sit at the center of online identity, communication, and services.
Hotmail later became part of Microsoft’s MSN offerings and, over time, evolved through multiple rebrands—eventually becoming what many users know today as Outlook.com. (Source)
Quick Answer: When did Microsoft buy Hotmail?
Microsoft bought Hotmail on December 31, 1997, when it officially announced the acquisition. (Source)
What Hotmail Was Before Microsoft Bought It
Hotmail launched in 1996 and quickly stood out because it was web-based—you didn’t need an email program tied to a single PC, office network, or internet provider. You could sign in from anywhere using a browser, which was a big deal in the dial-up era.
Hotmail’s founders are widely credited as Sabeer Bhatia and Jack Smith, and the service grew rapidly to millions of users before Microsoft stepped in. (Wikipedia)
Why Hotmail felt “revolutionary” in the 1990s
- Freedom from ISP email (no more “email locked to your internet connection”)
- Accessible anywhere through the browser
- Fast growth through easy sharing and sign-ups (early viral-style adoption)
- A simple, mass-market internet product people could understand instantly (Wikipedia)
Why Microsoft Wanted Hotmail in 1997
Microsoft’s announcement made the strategy clear: Hotmail would become a major part of The Microsoft Network (MSN)—Microsoft’s online services ecosystem.
At the time, the internet was rapidly becoming mainstream, and Microsoft was competing for where users would “live” online: portals, messaging, news, and—most importantly—email accounts that users checked daily. Email was (and still is) one of the strongest “sticky” services: once people choose an address, they tend to keep it for years.
Microsoft said Hotmail would be an important component of its online communication and information services offered through MSN. (Source)
The business logic in simple terms
- Email = identity (your login, your address, your inbox history)
- Email = daily habit (keeps people coming back)
- Email links to everything else (news, chat, shopping, communities, later cloud services)
- Mass adoption path (free email → huge user base → monetization through ads/services)
What the Deal Included (and What People Reported About the Price)
Microsoft’s press release confirmed the acquisition, but public reporting over time has included different figures for the price. Some sources commonly cite around $400 million as a reported figure, while other compilations list different amounts. Because of these variations, it’s safest to treat the price as widely reported but not consistently stated across sources, unless you’re quoting a specific publication.
What is consistent and well-documented: the acquisition happened on Dec 31, 1997, and Microsoft integrated Hotmail into its online services strategy. (Source)
The Immediate Impact After the Acquisition
After Microsoft acquired Hotmail, it became a key part of Microsoft’s consumer internet push. By late 1998, Microsoft was publicly describing Hotmail’s massive scale and momentum, highlighting its user base and rapid new-account growth, and noting it had been acquired in December 1997. (Source)
What changed for users?
- Hotmail increasingly tied into MSN branding
- Infrastructure and long-term roadmap shifted toward Microsoft’s ecosystem
- The service expanded as Microsoft pushed it globally (more languages/regions and deeper integration over time)
How Hotmail’s Name and Branding Evolved
Hotmail didn’t stay “just Hotmail” forever. Microsoft gradually repositioned and rebranded it as part of its broader consumer platform strategy.
A simplified evolution many users remember:
- Hotmail (early era)
- MSN Hotmail (MSN integration period)
- Windows Live Hotmail (Windows Live services era)
- Outlook.com (modern webmail brand)
Hotmail’s history—including launch and later evolution into Outlook.com—is well documented in overviews of Outlook.com/Hotmail history. (Wikipedia)
Why This Acquisition Matters in Internet History
Microsoft buying Hotmail is often seen as a defining “internet platform” move of the late 1990s. It showed that:
- Web services were becoming as important as desktop software
- Consumer internet scale (tens of millions of users) would reshape strategies
- Free, ad-supported products could become gigantic user funnels
- Email would become a “base layer” service powering many other experiences
And importantly, it helped push the idea that your email address could be a long-term digital identity—something you carry from school to work to adulthood.
Timeline Snapshot: From Launch to Microsoft Acquisition
- 1996: Hotmail launches as a free web-based email service (commercial launch widely cited in 1996). (Wikipedia)
- December 31, 1997: Microsoft announces it has acquired Hotmail. (Source)
- 1998 onward: Hotmail becomes increasingly integrated into Microsoft’s consumer internet offerings, including MSN. (Source)
FAQs
1) Did Microsoft buy Hotmail or “Hotmail client”?
Hotmail was primarily a web-based email service, not a desktop email client in the classic sense. Microsoft acquired the service and its operations. (Source)
2) What exact date did Microsoft buy Hotmail?
Microsoft announced the acquisition on December 31, 1997. (Source)
3) Who founded Hotmail?
Hotmail is credited to Sabeer Bhatia and Jack Smith. (Wikipedia)
4) What is Hotmail called today?
Hotmail eventually transitioned into Microsoft’s modern consumer email platform now known as Outlook.com. (Wikipedia)
References (for fact-checking)
- Microsoft press release announcing the Hotmail acquisition (Dec 31, 1997). (Source)
- Microsoft acquisition history list (shows Hotmail on Dec 31, 1997). (Microsoft)
- Microsoft “History of Microsoft – 1997” entry referencing the acquisition announcement. (Microsoft Learn)
- Outlook.com/Hotmail background history overview (launch context and evolution). (Wikipedia)
