Microsoft revamps Hotmail as social-friendly Outlook

Seattle - Microsoft Corp unveiled a revamped, Facebook-friendly version of its free, online email service on Tuesday in an attempt to reverse market share losses to Google Inc's fast-growing Gmail. The world's largest software company is renaming its Hotmail service Outlook, giving it a sharp new look, social network links and new features for handling the tide of junk and mass mail that swamps many users.

Hotmail was still the world's largest online mail service as of June, according to the latest comScore figures available, with 324 million users, or about 36 percent of the global market.

But it is losing customers to Google's Gmail, the fastest-growing rival, which now has about 31 percent of the market. Yahoo Mail is static with about 32 percent. (For a graphic showing webmail market share, click on link.reuters.com/ded79s)

In a bid to recapture growth, Microsoft is renaming the service Outlook, a name familiar to most corporate workers who use Microsoft's Office email application, and sprucing up the whole experience. Hotmail users will be prompted to switch over to the new service over the next few months.

Hotmail, launched in 1996, was one of the first online email services, but it has not been updated by Microsoft for eight years.

"A lot has changed in the last eight years, and we think it's time for a fresh look at email," Chris Jones, Microsoft's corporate vice president of Windows Live, said in a blog post.

The new look is clean and uncluttered, featuring lots of white space, reminiscent of Google's recent makeover of Gmail. Relatively unobtrusive advertisements appear in a column to the right of the screen when looking at folders. They do not appear when a message is open.

Users can link up with their Facebook (FB.O), Twitter, LinkedIn (LNKD.N) and Google+ accounts, to see the latest updates from friends and contacts. Online chat is available via Facebook.

Newsletters, offers, daily deals and social updates make up over 80 percent of a typical inbox, according to Microsoft's own research. To help combat that overflow, the new service automatically detects mass messages and puts them in separate folders. Users can customize the process to sort mail any way they want to.

The new mail service also allows easy use of Microsoft's Internet-based products, such as SkyDrive for storing documents, Office Web Apps for working away from a PC and will eventually have Skype video chat built in.

"This is about the battle of where people will make their communication home," said Al Hilwa, an analyst at tech research firm IDC. "The big online players are connecting their online assets together and hoping to provide convenience and functionality of a one-stop-shop of cloud services."

The success of Microsoft's new service will depend on whether it can develop it quickly enough "to keep up with a brutally fast Google and a potentially re-invigorated Yahoo," said Hilwa.

Users can access the service at www.outlook.com. Microsoft said the service is currently a "preview," meaning more features will likely be added before the final version is fully launched.