Hotmail outage peeves some e-mail users

A faulty server is apparently the root of the problem, according to a Microsoft customer service representative who confirmed the outage on Wednesday. The representative declined to immediately discuss the nature of the problem, when it began, or how many of Hotmail's 187 million users are affected.

The outage has caused intermittent access to Hotmail accounts for some consumers over the last couple of weeks and, more alarmingly, appears to have erased new and saved messages from in-boxes, according to several people who contacted CNET News.com about the problem. It is also the latest in a string of ongoing customer complaints about the service.

Customers, especially paying ones, are starting to lose patience.

"For a company the size of Microsoft, which bills themselves as a progressive, consumer-friendly organization, they're really taking a long time to fix this," said Dwight Foster, a Hotmail subscriber in Orinda, Calif., who pays $20 a year for an account with extra storage. "I'm about to blow a gasket."

Angry Hotmail customers are bad news for Microsoft, which faces fierce competition from Google and Yahoo in the free e-mail services market. Google turned up the heat on its rivals last year when it launched a test version of Gmail, an e-mail service featuring 1 gigabyte of free storage. Microsoft and Yahoo have been rushing to catch up ever since.

Gmail has been a particular pain for Microsoft, according to a new study. When signing up for Gmail, more people switch from Hotmail than from any other competing service, according to Return Path, a company that makes tools to ease the transition from one e-mail program to another. About twice as many people abandoned Hotmail accounts than Yahoo ones in favor of Gmail in the last half of 2004, the study said.

E-mail is a key component in each company's growing stable of online properties that generate billions of dollars in annual advertising revenue.