Microsoft One-Ups Google with Hotmail Makeover

Over the next few weeks, Microsoft will be pushing out its new Hotmail offering to e-mail users in waves, so anyone who hasn't yet seen the new version can rest assured it will soon be coming. One nice touch, in addition to the bump in storage capacity, is Hotmail's new dashboard, which allows more e-mails to be displayed on the page.


Microsoft Relevant Products/Services is boosting the amount of free storage space that Hotmail users receive to 5 GB. Paying Hotmail users will see their e-mail storage capacity, which costs $15 per year, grow from 4 GB to 10 GB. In contrast, Google currently provides 2.8 GB of free Gmail storage space and sells 6 GB of extra capacity for $20 per year.

When it comes to storage alone, Yahoo remains on top with its unlimited storage offering. But Microsoft is banking that its latest moves to rev-up the Windows Live Hotmail engine and give the service an edgy new dashboard will be enough to keep it ahead of the pack.

"Speed is one of the most important aspects of a Web-based e-mail service," wrote Microsoft Live Hotmail program manager Ellie Powers-Boyle in a recent blog. "We've spent more time in this release identifying what parts of the product are slowest and fixing those."

Makeover Highlights

Over the next few weeks, Microsoft will be pushing out its new Windows Live Hotmail offering to e-mail users in waves, so anyone who hasn't yet seen the new version can rest assured it will soon be coming their way.

One nice touch is Hotmail's new streamlined dashboard, which compresses the header so that more e-mails can be displayed on the page. The new format gives users the ability to automatically tell friends when they will be away on vacation, which has long been a prized feature of Outlook.

Hotmail now blocks images and links in e-mail messages from unknown senders, and provides a one-click way for users to report suspected phishing attacks. Moreover, a contacts de-duplication function is on tap to give users a one-click way to update information for anyone already listed as a contact.

Hotmail subscribers will be able to view their e-mail in either the new or classic versions of Windows Live Hotmail, with the classic version perhaps more appropriate for users with less speedy Internet connections who need a simple way to read and manage e-mail. Moreover, Hotmail users who would prefer to go straight to their e-mail inboxes upon login now have the option of turning off the MSN Today page, Powers-Boyle said.

Looking for the Best Deal

Yankee Group research fellow Laura DiDio said she thinks that Microsoft will have to ensure that Hotmail continues to evolve. "If you are Microsoft, it's not enough to just keep up with the Joneses when Mr. Jones is really Google and he's going after your businesses," DiDio said.

These days, the average consumer is just as likely to have a Gmail account as a Hotmail account, DiDio noted. However, many consumers no longer believe in customer brand loyalty and will go to the vendor that gives them the best deal and the best support, she said.

So Microsoft not only has to do everything it can to keep the customers it already has, but also must continue to play one-up with Google, DiDio explained. The happy result is that consumers will continue to benefit from the contest, she concluded.