Hotmail still busiest webmail site in terms of internet traffic but recent stagnation prompted decision to relaunch as Outlook
It is difficult to say exactly when Hotmail lost its cool factor, but a series of missteps have turned Microsoft's email service into a languishing relic of the early internet.
Microsoft has announced that it will bring down the curtain on Hotmail later this year, moving its 350 million users (still – yes, really!) to the revamped Outlook.com.
The move is designed to unify Microsoft's range of software products, such as Windows Phone and Office, and entice a new generation of Facebook-addicted users who want to see status updates alongside emails.
Like many, I suspect, I ditched Hotmail in around 2007 for Gmail. Size matters, and Google offered more space for chunky messages. It had the added bonus of being a cleaner inbox with a more professional-looking email address. Hotmail, it seemed, had become a place for teenagers who preferred to spend more time using MSN Messenger than lengthy emails.
"Certainly Hotmail has been stagnating," said Jeff Mann, the vice-president of research at analysts' firm Gartner. "Hotmail was one of the first to gain a lot of the early users and then Google came along and captured a lot of its cool factor."
When it launched Gmail, Google was already known to millions as the window to the entire internet through its ubiquitous search engine.
However, despite buying Hotmail in 1997 – a year after it launched – Microsoft is still best known for its relatively unsexy Windows operating system and suite of Office products.
"Google became the cool email place and Hotmail became Compuserve," Mann said, a reference to the stuffy internet service provider that cornered the early US commercial internet. "You knew if you had a Compuserve address you were not cool and Hotmail was threatening to go in that direction."
Since the mid-noughties, Microsoft has steered Hotmail through a series of rebranding exercises: from Windows Live Hotmail in 2005, to include Windows Live Web Messenger in 2007, and other feature updates as recently as early 2012.
The changes proved to be superficial, and Hotmail login began to stagnate as rivals gained ground and younger users devoted more time to social networking.
Despite all that, according to the web metrics firm comScore, Hotmail is still the busiest webmail site in terms of internet traffic. In June 2012, Hotmail had 324 million monthly visitors, compared with 290 million at Yahoo Mail and 278 million at Google's Gmail.
It is significant, though, that Hotmail is the only one of those three to see traffic fall year on year, down 4% on June 2011, compared with a 17% boost at Gmail and a 2% rise at Yahoo Mail.
In the UK, Hotmail still has twice as many users as Gmail, which became the dominant email provider in the US midway through 2010.
"Hotmail still ranks as the number one email service in the world, despite seeing strong competition from Gmail and Yahoo Mail, and is used by more than one in five of all global internet users," said Mike Shaw, director of marketing solutions at comScore.
"Almost 40% of all users who visit any Microsoft site use Hotmail, and it is still one of their most popular services, even in spite of the small decline over the past year."
He said that Hotmail had been an undoubted success for Microsoft, which bought it from ex-Apple employees Sabeer Bhatia and Jack Smith for a reported $400m in 1997.
But what matters now is whether Hotmail's successor, the already available Outlook.com, reverses its decline in fortunes. The service will be fully integrated with Facebook, Twitter, LinkedIn and Skype so users will rarely have to leave their Outlook inbox.
And, more importantly, Outlook users will be able to keep their Hotmail addresses. For now.
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