'' Craddock said in an interview on Monday . `` It was a great learning experience about what really matters . '' After a few years of lightning-fast growth for Gmail following its launch and at the expense of Hotmail , Microsoft reversed course . `` We set out to really invest in Hotmail and really , to rebuild it from the ground up , '' said Chris Jones , a vice president who oversees several of Microsoft 's Internet applications . The Hotmail team eventually got the green light to dial down the ads while increasing development on features made available to nonpaying users . Making money directly from Hotmail `` is not the most important thing for us to optimize for , '' Jones said in an interview . `` The lesson from some of the most successful Internet companies is they build something valuable and durable . '' That is a notion , Jones said , that Microsoft learned from a rival , Google , and from a partner , Facebook . It is not conventional wisdom for Microsoft , which makes most of its revenue from software sold for hundreds of dollars a package in brick-and-mortar
San Francisco -LRB- CNN -RRB- -- Remember when Hotmail was hot ? Dick Craddock , who manages the group responsible for Microsoft 's Web-based e-mail service , can still recall the day of celebration in 2004 when the Hotmail division had just posted a stunning financial quarter . Craddock , along with other Microsoft execs and developers , convened to relish in the victory . The triumph was short-lived because soon after , Google launched a competing Webmail service called Gmail , and like in the short time it takes Google to call up a search query , Hotmail instantly looked dated . Gmail gave users a gigabyte of file storage for free , while Hotmail presented a few megabytes and required users to pay for more . Gmail was fast , spam-free and let people attach files several times larger than that of Hotmail . And Gmail only showed small text advertisements , while Hotmail 's pages were covered in ads , which is why the site was able to exceed financial goals during that quarter in 2004 . After evaluating the options , `` it was n't hard to pick Gmail ; it just was n't hard ,