Hotmail: Free email for sale

1
Hotmail Free email for sale

• Mahkameh Yaghmaie
• Tannaz Alinaghi

2
contents

• History
• The founders
• The concept
• The capital
• The beginning
• The growth
• The competitors
• Options
• Solution

3
History

• Founders (colleague)
• Sabeer Bhatia
• Jack smith
• Initial goal
• Web-based DB JavaSoft

4
Idea motivation

• 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

5
Business model

• 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

6
Where the initial investment came from

• 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

7
Marketing approach

• 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

8
Target market

• Initial marketplaces
• Consumer market
• Corporate market
• Packaged web email product with Hotmails
  software
• Bhatia decided to focus on the first marketplace

9
Managerial approach

• 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.

10
Launching hotmail

• Launch
• 100 subscribers in the first hour
• 100,000 subscribers in a month
• 1 million in less than six months

11
The road to maturity

• 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

12
Technical solutions

• Were 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.

13
Flourishing

• 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

14
Whats up now

• 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

15
Wise decision

• For company survival
• Develop partnership
• Or
• Risk giving away potential profits to the
  competitors
• Accept Microsoft Offer for partnership

16
Thank u for ur patience!