HotMail

							          Mahkameh Yaghmaie
              Tannaz Alinaghi




Hotmail   9/3/2011          1
 History
    The founders
    The concept
    The capital
 The beginning
 The growth
 The competitors
 Options
 Solution



                    Hotmail   9/3/2011   2
 Founders     (colleague)
     Sabeer Bhatia
     Jack smith
 Initial   goal
     Web-based DB: JavaSoft




                       Hotmail   9/3/2011   3
 Full time workers
 The need to set aside some extra hours
  outside the workday
 Difficulties in communication
 Web was just a directory of information
 The idea of a web-based communication tool




                   Hotmail   9/3/2011   4
 No ISP or email provider subscription
 Free service
 Revenue model based on marketing
    Provide access to subscribers
    Track subscribers’ surfing habits
    Allow advertisers to customize advertising
     information




                       Hotmail   9/3/2011         5
 December   1995
 Venture capital firm of Draper Fisher
  Jurvetson (DFJ)
 For the purpose of selling a web-based DB
 DFJ happened to like the email idea more
 DFJ granted $300,000 for 15% of the
  company




                    Hotmail   9/3/2011   6
 DFJ   started viral marketing for HotMail
 Viral marketing happens when users of a
  service or product advertise the service or
  product by simply using it
 In hotmail, a message ends with an
  advertisement directing the recipients to the
  hotmail registration site
 This is not junk-email
 It is not very different from a banner ad




                    Hotmail   9/3/2011   7
 Initial   marketplaces
     Consumer market
     Corporate market
     Packaged web email product with Hotmail’s
      software
 Bhatiadecided to focus on the first
  marketplace




                       Hotmail   9/3/2011     8
 Salaries and stock options were used to
  attract employees
 “My greatest accomplishment was not to
  build the company, but to convince people
  that this is their company. I showed people
  how this would ultimately benefit them. . . .
  We initiated the avalanche.”




                    Hotmail   9/3/2011    9
 Launch
    100 subscribers in the first hour
    100,000 subscribers in a month
    1 million in less than six months




                        Hotmail   9/3/2011   10
 Growth     issues:
     Intermittent service outages
     Junk mails
 Solutions
     Never restricted number of users unlike Juno
     Implemented a new, highly scalable and
      redundant architecture
     Able to sustain more than 50,000 new users a day
     Provided filters for users
     Automatic control on the mailing behavior of the
      users

                        Hotmail   9/3/2011     11
 “We’re particularly excited about the load
 balancing design of this architecture, When
 [users log] on to Hotmail, they get the least
 busy path to their e-mail, which dramatically
 enhances their online experience.




                   Hotmail   9/3/2011   12
 In   1997
     over 5 million subscribers
     Second largest email provider after AOL
 Competitive     advantages
     No need to subscribe for a special internet access
     Revenue model based on advertising
     Geographic expansion
     No limit on the number of new subscribers
     Easy to subscribe



                         Hotmail   9/3/2011      13
 Hotmail      options
    Merge with a large portal like MSN
        Microsoft lacked a free web-based email service
    Go public
        Huge competitors like AOL and CompuServe with a
         huge capital
    Remain private
        Juno and USA.net continued to thrive




                            Hotmail   9/3/2011        14
 For    company survival
    Develop partnership
        Or
    Risk giving away potential profits to the
     competitors
 Accept      Microsoft Offer for partnership




                         Hotmail   9/3/2011      15
Hotmail   9/3/2011   16