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How Microsoft Is Making Hotmail Cool

Hotmail is the old fuddy-duddy of e-mail services, the service for elderly relatives and people who need a place to send their junk mail. But that's the old Hotmail. Microsoft is rolling out new capabilities for the service designed to make it a better tool for how we use e-mail in the 21st Century.

In redesigning Hotmail, Microsoft says it looked at the ways people typically use e-mail today, and configured Hotmail to make those tasks easier. The new service is optimized for a variety of common e-mail jobs: Keeping in touch with people we already know, managing messages from social networks like Facebook, tracking packages and e-commerce purchases, dealing with mailing lists and newsletters, sharing photos, and collaborating using Microsoft Office documents.

"We give you the tools to more efficiently manage and unclutter your inbox," Dick Craddock, group manager for Windows Live Hotmail, told me in a phone interview. "In the old days, when you logged into e-mail, you'd see 27 new messages, and they could be anything. They could be 27 messages you don't want to get, or 26 newsletters you don't want -- plus one message from your wife."

Most e-mail programs, including Hotmail, allow users to build rules to sort their e-mail automatically, but Microsoft finds most users don't bother creating rules, Craddock said. So Hotmail now comes with some filters built in.

Starting this summer when the upgrades begin to roll out, users will see a view of their inbox sorted by type when first logging in to Hotmail. They'll see new messages from people in their address book, a separate list of e-mail updates from social media sites, another list of newsletters updates, and so on. This enables users to see at a glance whether there's any e-mail they need to jump on right away, Craddock said.

Similarly, a new feature called "Sweep" allows users to select e-mail they want to delete or move, and Hotmail asks if the user wants to do the same thing with future e-mails from those senders.

Microsoft is also beefing up the collaboration features of Hotmail. Most collaboration done in e-mail comes in the form of attachments, and Hotmail users send and receive a lot of attachments. Microsoft finds that 95 percent of its Hotmail storage system is attachments, and 55 percent of those are photos, representing 7 billion unique photos, about 4 million daily. Some 15 percent of the attachment storage is Office documents.

Hotmail is being optimized to get around e-mail storage limits. People exchanging photos over e-mail want to just attach the photo to an e-mail message, but will run into attachment-size limitations for both the sender and recipient. Microsoft gets around those by instead uploading file attachments to its SkyDrive service, giving the recipients permission to view the photo, and sending out a link in e-mail. When receiving photos in Hotmail, the photo appears in the body of the message, even though it's stored on SkyDrive.

Hotmail users can send and receive a stupendous 10 GB of photo attachments on a single message.

When people share images and videos on services like Flickr and YouTube, the multimedia will be displayed inside Hotmail, reducing the need for people to leave e-mail and visit other Web sites.

Office documents are also stored on SkyDrive, with the added twist that people on an e-mail conversation can make changes to the documents and in that way use Hotmail as a platform for collaboration, even if the recipient of the e-mail doesn't have the right version of Office for that document type, or doesn't have Office at all.

In another, nice twist, Microsoft is making it easier to use the package-tracking messages that users get when doing online shopping. When a package-tracking message comes in, Hotmail will automatically call out to the shipping site and display the status of the package inline in e-mail -- again, so users can get that information without having to click out to an external site. Inline package-tracking now works only with the United States Postal Service, but Microsoft hopes to bring other partners on.

Hotmail is free for an ad-supported version, and $20 per year for an ad-free version. Users can get their own domain and use it with Hotmail, similar to what Google is doing with Google Apps.

Tech journalists and bloggers are describing the Hotmail upgrade as a competitive move by Microsoft against Google, and there's some truth to that. Some of Hotmail's new features catch it up to Gmail; VentureBeat has a good comparison of Hotmail and Gmail features. And Microsoft and Google are competing fiercely in the cloud.

But Google isn't Microsoft's biggest competition in Webmail. Yahoo is by far the most popular Webmail service, with 95 million site visitors in April. Microsoft Hotmail was a distant second, with 47 million visitors, and Google Gmail third, with 43 million, comScore told me.

As for me, while Hotmail is looking pretty good, I'm sticking with Gmail, because it's given me satisfactory service and I've got three years of inertia behind it. As Sun Microsystems co-founder Bill Joy once said, to get users to switch applications, the new application doesn't just need to be better, it needs to be orders of magnitude better.

I switched back to Gmail as my primary mail earlier this year, after flirting with another service for a few months. I use Gmail for both business and personal mail, and Gmail is business-ready.

Mitch Wagner is a freelance technology journalist and social media marketing consultant. Follow him on Twitter: @MitchWagner.

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