Was it bound to happen? From all intents and purposes, Hotmail should have been the webmail leader for many years to come. Why? It is one of the early pioneers of web-based E-mail. It is very viral and has a huge installed base. It frequently updates its services and most importantly it is backed by one of the biggest tech companies in the world. You probably heard of it. It is a company called Microsoft.
Yet, despite all its advantages, Hotmail managed to lose its top webmail service crown to Gmail; Google’s free E-mail based system. Hotmail has been around for 15 years going on 16 years and unfortunately this does not matter to its customers as more and more of its base migrates to Gmail. In a way, we do not blame them. Google is rapidly putting a Gmail requirement for all its services. Whether you are using YouTube, Google Docs, Blogger and a whole host of other Google services, you have to pass through a Gmail account. There is a network effect here. If you are using YouTube, and you want to participate, you are always presented an opportunity to get more integrated by having a Gmail account. This is all a reflection of how fast Gmail has been growing and also explains that growth. In effect, by using Google Search and other Google services, Google is branding people to go the next step and commit to a Gmail account.
Gmail is a core part of Google strategy because once you store people’s E-mails, the rest of the other functionalities can flow from there. It gives a focal point to the user of how they approach the internet. While many people already have Google as their home page, Gmail adds an extra layer of centralization to this whole experience. In ironic sense, Google is fast delivering on the promise of portals that Yahoo tried to perfect back in the days of web 1.0. Gmail’s adoption rate is a testimony to how well Google’s strategy is playing out. In January, the company disclosed for its earnings call that Gmail had 350 million active users. Now Google announced that it has reached 425 million active users. That is a phenomenal growth rate that is close to 25%. No wonder it has overtaken Hotmail and at that rate, it is looking to bury it. This is yet another remainder for those on the fence regarding buying Google stock that this might be a good time to finally go in. Again, that is just our opinion, but despite all of Google’s past failures, it definitely shows that patience, perseverance and sustained effort is the way to success.