San Francisco (CNN) -- 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.
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Microsoft is hoping to improve the reputation of Hotmail
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The Web-based e-mail service, once a dominant player, is losing steam
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Hotmail faces a growing list of competitors, including Apple, Facebook, Google
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