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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Microsoft announced that it had acquired Hotmail on December 31, 1997. It said Hotmail would become an important part of MSN, but it did not disclose the deal’s financial terms. A later WIRED report put the value of Microsoft shares exchanged for Hotmail at about $400 million; that was a retrospective valuation, not an official cash purchase price.
When did Microsoft buy Hotmail?
Microsoft announced the acquisition on December 31, 1997, a date also recorded in the company’s acquisition history. Hotmail was a free, web-based email service that people could access from an internet-connected computer. Microsoft said it had more than 9 million members worldwide at the time of the announcement.
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Hotmail had launched on July 4, 1996, according to WIRED’s 1998 retrospective. Co-founder Sabeer Bhatia recalled that the service had 8 million users by the time Microsoft recognized it. That is a separate reported snapshot from Microsoft’s figure of more than 9 million members at the acquisition announcement.
How much did Microsoft pay for Hotmail?
Microsoft’s December 31, 1997 announcement said, “Financial terms of the transaction were not disclosed.” WIRED’s December 1998 retrospective later reported that an S-3 registration showed 2,769,148 Microsoft shares exchanged for Hotmail, valued at approximately $400 million at the time. That figure describes the reported value of the shares, not a purchase price Microsoft disclosed in its announcement or a confirmed cash payment.
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Contemporary estimates were inconsistent. WIRED’s January 2, 1998 report attributed a $15 million to $30 million estimate to analyst Rob Enderle and a $300 million to $400 million estimate to unnamed analysts cited by The Wall Street Journal. These were outside estimates, not official terms of the transaction.
Why did Microsoft acquire Hotmail?
Microsoft framed the purchase as part of its plan to build MSN’s online communication and information services. Laura Jennings, vice president of The Microsoft Network, said, “The acquisition of Hotmail completes a strategy we’ve had for the past nine months to offer the key services that people want on the Internet.” The company also described Hotmail as complementing its email products, including Outlook Express, Outlook and Exchange.
Hotmail offered a permanent email address accessible from any internet-connected PC, as well as the ability to retrieve mail from up to four POP3 accounts, according to Microsoft’s announcement. Jennings said Microsoft wanted “to provide consumers the best combination of free and premium e-mail services.” The acquisition therefore brought MSN a large web-based email service alongside Microsoft’s existing client and server products.
What happened to Hotmail after the acquisition?
Microsoft said Hotmail would continue operating in Sunnyvale, California, as a wholly owned Microsoft subsidiary reporting to Laura Jennings. In January 1999, Microsoft reported that Hotmail had more than 30 million members and was adding an average of 150,000 new accounts per day. Those are company-reported historical figures from that date, not current user counts.
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At the time of the acquisition, Bhatia, Hotmail’s president, CEO and co-founder, said: “We’re very proud of the business we’ve built and are gratified by consumer acceptance of our service and our technology.”
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