This paper studies the evolution of Internet Email as a product and assesses the opportunities and challenges that face such web-based service products. This study aims to apply the generic product management concepts and critique their applicability to the world of the internet. The product shall be evaluated in the backdrop of internet email provided by 3 major providers – Yahoo! mail, Gmail, and Microsoft Live Hotmail.


As a communication medium, internet email today is an indispensable part of the daily routines of many a human. Email penetration is nearly as high as the penetration of the internet – as it remains the most important and most commonly used application on the internet. Despite being a free product that is largely taken for granted by its users, it continues to evolve, with more innovative features being made available through major providers. When email was first introduced in 1972, no customers demanded the functionality; it addressed a latent need to communicate. In subsequent years, the features were driven by a combination of “need” and “technology advances.”

Email is now widely used for official and personal communications (some countries allow emails as evidence by law). One cannot imagine a business card without an email address! More importantly, it enables several innovative marketing strategies as it offers a cheap medium to “reach” existing and potential customers. On the darker side, it is riddled with issues like spam, viruses, phishing, privacy invasion and security Being Mad.

Evolution of Internet Email

The earliest messaging system used in MIT since 1965 were MAILBOX and SNDMSG, which were used to send user-to-user messages in the same box. Ray Tomlinson[1] is credited with inventing email in 1972 when he first used the symbol “@” to address communications to other computers – this is regarded widely as the advent of emails. By 1974, there were hundreds of military users of email on ARPANET. The first significant leap was made when the SMTP (Simple Mail Transfer Protocol) came into being – it was a pretty naïve protocol with no mechanism to authenticate the sender; however, this is still being used with some modifications. Even today, some of the original issues continue to be exploited by spammers and virus writers.


In 1993, large network service providers America Online and Delphi started to connect their proprietary email systems to the Internet, beginning the large-scale adoption of Internet email as a global standard[2]. As the World Wide Web gained momentum and the need to access emails from anywhere in the world arose, the email began to be offered by web services providers like Yahoo! and Hotmail. While initial email systems charged users on a per-minute basis on a dial-up connection, the advent of internet email almost simultaneously brought about free availability.

Hotmail, founded by Sabeer Bhatia and Jack Smith in 1996, was one of the earliest internet-based email providers. By 1997, Hotmail had become so popular that companies like Yahoo, AOL, and Microsoft were vying to buy it out. Yahoo! and AOL could not afford the valuation that Sabeer Bhatia demanded for selling. He also rejected $150 Million and $350 Million offers from Microsoft after finally settling for $400 Million in early 1998. Hotmail then became MSN Hotmail and is now called Windows Live Hotmail. It had over 270 million users worldwide as of 2008[3].