Windows Live Hotmail, the most significant update to Microsoft's Web-based e-mail service since the company acquired it in 1998, boasts a redesigned interface, more e-mail storage, and free connectivity from Microsoft's Outlook 2003 or 2007 e-mail clients. The improved service, in beta testing for nearly two years, was necessary to keep Hotmail competitive with Yahoo Mail and Google's Gmail service. Although Hotmail itself probably contributes little advertising revenue, its 280 million users may be drawn to more lucrative Microsoft online services, such as MSN content sites and Live Search.

New Online Features

Windows Live Hotmail (at one point called Windows Live Mail) began beta testing in July 2005. The redesign came in response to Google's Apr. 2004 launch of Gmail, which offered 1GB of storage (the standard for free services at the time was 4MB or less) and threaded conversations. Yahoo Mail also began testing a major redesign in June 2005.

In May 2007, Windows Live Hotmail finally exited beta testing. It includes the following improvements, most of which were available during the beta test:

• A user interface that resembles Outlook Web Access, with a reading pane, right-click menu options (e.g., reply, delete), and drag-and-drop
• 2GB of storage, up from 250MB
• Full-text e-mail search (instead of search only of e-mail headers)
• Dynamic spell-checking, with red squiggly lines indicating misspelled words (similar to Microsoft Word)
• A Safety Bar turns yellow when users read a message from an unknown sender and red when Hotmail suspects it's a fraudulent attempt to get users' personal information
• A Photo Control (for Internet Explorer only) allows users to edit photos before attaching them to messages
• Account expiration after 120 days of no log-ons (compared with 30 days previously)
• An address book based on the Windows Live Contacts service, giving users a single contacts list with presence information (e.g., online, away) across multiple Windows Live services, including Messenger and Spaces.

Current Hotmail customers can upgrade by clicking on a green "Join Windows Live Hotmail" button. Upgraders will automatically get most of the new features, such as increased storage and the Safety Bar, but will continue to see the old interface until they manually select the new interface. Microsoft made this decision based on beta feedback, as some current Hotmail users were confused by the interface change. By the end of 2007, Microsoft will forcibly migrate all existing Hotmail users to the new service.

New Hotmail members will automatically get the entire redesigned service, including the new interface.

Windows Live Hotmail Plus, the update to the US$20-pear-year Hotmail Plus subscription service, offers users 4GB of storage, aggregation of POP3 accounts, 20MB maximum attachment size (up from 10MB in the free version), no account expiration, and no advertisements.

A Hotmail Calendar update is planned for later in 2007. One obvious area for improvement would be support for the iCalendar format, which would allow users to post from Windows Vista's calendar application to the Hotmail calendar site—something that's not possible today.

Another apparent oversight is that Windows Live Hotmail users still cannot sign up for an e-mail account with the live.com domain (e.g., mattrosoff@live.com), but instead must continue to use hotmail.com. This is a problem for new users, because many desirable hotmail.com usernames are already taken.

Free Outlook Access, New Client

Along with the redesigned online service, Microsoft has announced two important changes for desktop e-mail clients:

Free Outlook access. By late May, Outlook 2003 or 2007 users will be able to access Windows Live Hotmail accounts for free. Formerly, Outlook access to Hotmail required a subscription to Hotmail Plus (US$20 per year) or Outlook Live (which included the Outlook 2003 client and cost US$50 per year)

Live Mail client replaces Outlook Express. The free Windows Live Mail desktop client will emerge from beta testing in mid-2007. This client can access any POP3, IMAP, or Windows Live Hotmail account and includes offline message storage and an RSS reader. The final version will not feature display advertisements, as Microsoft once suggested it would, and users will be able to turn off contextual advertisements that appear in the right-hand pane (part of a feature called ActiveSearch), This client is the replacement to Outlook Express (in earlier versions of Windows) and Windows Mail (in Vista), which will get no further development.

Resources

Windows Live Hotmail is at www.hotmail.com.

Background on the Windows Live Mail desktop client can be found in "Desktop Client for Windows Live Mail" on page 24 of the Apr. 2006 Update.

Vista's Windows Calendar and Windows Mail applications are covered in "Vista Bundles Consumer Tools, Applications" on page 7 of the May 2007 Update.