Microsoft acquires Hotmail

Microsoft Corp. announced today it has acquired the free E-mail service Hotmail.

Officials for the Redmond, Wash., company said Hotmail will become a "component" of the Microsoft Network, allowing users to check their MSN E-mail from a Hotmail account.

"Our goal is to combine the benefits of Hotmail with Microsoft services and technology to provide consumers the best combination of free and premium E-mail services," said Laura Jennings, MSN vice president, in a statement. "We are committed to making it even easier for people to communicate over the Internet from anywhere in the world."

Rumors about a possible acquisition surfaced earlier this month, with some sources putting a price tag on the deal of between $300 million and $500 million. Microsoft did not release financial details about the deal.

Hotmail allows users to access E-mail over the Web from any computer via an account with the service. Supported by advertising, the free service has attracted more than 9 million subscribers, rivaling America Online Inc.

Analysts said several weeks ago that the quest to grab the attention of Internet users had piqued Microsoft's interest in the company, and was the motive behind deals such as Yahoo! Inc.'s acquisition of Four11 Corp., an Internet directory service, for $94 million.

Hotmail will operate as a wholly owned subsidiary of Microsoft.