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Hotmail outage fixed

The free email company recovers from a "special system condition" it suffered just a week after being bought by Microsoft.

A system problem blocked some Hotmail users from logging on to their free email accounts yesterday, inconveniencing users of the popular network.

The "special system condition," as Hotmail put it, came less than a week after the closely held company agreed to be bought by Microsoft to make free email a feature of the Microsoft Network. Some analysts speculate the stock deal could be worth between $300 million and $400 million--surprisingly high for a barely two-year-old company--but Hotmail and Microsoft declined to comment.

A Hotmail spokeswoman said today that the system problem has been fixed, enabling all Hotmail users to log onto their accounts normally.

"Microsoft buys Hotmail [and] a few days later, frequent Hotmail outages begin to occur. Hmm," mused one user to CNET's NEWS.COM yesterday. Another said he was switching to another free email account in light of Microsoft's buyout.

The outage had nothing to do with last week's announcement, Hotmail said. "No way," as a spokeswoman put it. A message posted to users said: "We apologize, but you seem to have caught us in the middle of a special system condition. The Hotmail server for your account should be available once again in approximately one-half day."

Hotmail vice president of sales and marketing Steve Douty said the "temporary outage" only affected "a fraction" of Hotmail's 9.5 million registered users, but he couldn't be more specific. He also couldn't be specific about the nature of the problem but assured users that there would be no loss of messages.

Douty said the incident was isolated and said Hotmail has an "extremely high uptime" record.

As reported last February, a technical glitch at Hotmail caused some customers to think they were getting other people's email, but the company said there was no security breach. Some 50,000 customers were affected.

Free email products such as Hotmail also have been a target for spammers, but the companies all have cracked down with aggressive antispam policies. Typically the spam is not sent from one of the free email accounts, but the account is forged in the email header.

The demand for free email has been explosive, and lucrative to sellers. In October, Yahoo said it would buy Four11 in a stock deal worth $92 million. Those high values for such new companies are another example of the hype and promise of the Net, analysts say.