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MSN Hotmail is a free webmail e-mail service, which is accessible via a web browser. Its competitors include AIM Mail, Gmail and Yahoo! Mail. Windows Live Mail is to replace Hotmail once it is complete.

Hotmail, founded by Sabeer Bhatia and Jack Smith in 1995, was commercially launched on July 4, 1996, Independence Day in the United States, symbolically representing freedom from ISPs. Jack Smith first had the idea of accessing e-mail via the web from a computer anywhere in the world, originally in order to get by corporate firewalls blocking regular mail services. When Sabeer Bhatia came up with the business plan for the mail service, he tried all kinds of names ending in "-mail" and finally settled on Hotmail because it included the letters "HTML" - the markup language used to write the base of web pages. It was initially referred to as HoTMaiL with selective upper casing. The Hotmail logo before it was rebranded under MSN. The Hotmail logo before it was rebranded under MSN.

Hotmail was originally backed by the venture capital firm Draper Fisher Jurvetson. By December 1997, Hotmail reported more than 8.5 million subscribers and was sold later that month to Microsoft for a reported US$400m, after which it was rebranded under the MSN umbrella.

By February 1999, Hotmail reported more than 30 million active members. Hotmail serves e-mail accounts in many countries, supporting 17 languages, and is still one of the largest webmail providers as of July 2005, with 35.5% world market share according to comScore Media Metrix data.

The Hotmail development and operations teams are based in Mountain View, CA at the company's Silicon Valley Campus.

Hotmail offers 250 MB of free e-mail storage (although there is a 10 MB attachment limit) for users in 24 countries, among them the United States, Brazil, Canada, the UK, Spain and Australia; users in other countries may get a mailbox limit of 2 MB, which is usually increased to 250 MB after a period of time. This substantial increase in mailbox size was introduced shortly after Google's Gmail debuted. MSN is now offering 2 GB of free e-mail storage to members. At present, customers can pay a fee to receive 2 GB of storage and 20 MB attachments. Some countries still get only 2 MB of mailbox limit.

On November 18, 2004, Hotmail began offering email addresses from several country-specific domains. For example, users can now register a @hotmail.co.uk address, which gives users greater choice in their e-mail address, as many @hotmail.com addresses are already taken. MSN had run auctions on eBay for popular addresses when the service launched and the money was donated to the NSPCC charity.

MSN offered a premium service entitled "Personal Address", but it was decommissioned in August of 2006 and replaced with Windows Live Custom Domains, a free service under the Windows Live brand of Microsoft online services.

Windows Live Custom Domains is offered to anyone who owns a domain through a 3rd party registrar. Customers can sign up at domains.live.com, register their domain, and receive unlimited free Hotmail accounts, 40 invitations to Windows Live Mail beta, and Open Membership, which allows anyone to sign up for an e-mail account with the domain name without the administrator's intervention.