Hot or Not: New Hotmail Is No Knockout

UPDATED Hotmail, the leading web email provider, has coasted along for years with barely a feature update. But Microsoft (s MSFT) is finally planning a major release for later this summer and on Monday provided reporters with a preview. The modernized Hotmail will include new features include better email filtering, rich media viewing and document editing.

First of all, Microsoft is bringing Hotmail up to speed with the competition — namely, Google’s Gmail (s GOOG) — and offering increased storage, spam detection, conversation threading (but not by default), integrated chat, and a better mobile experience on platforms such as BlackBerry (s RIMM) and Nokia (s NOK).

The new Hotmail has no notable social features, unless you count photo-sharing. That’s a pretty strange omission. Yahoo Mail (s YHOO), which acquired Xoopit and has integrated a social news feed into the inbox, is far ahead in this department. And Google’s recent foray into innovation around email was Buzz, which after privacy issues at launch still hasn’t made itself that useful. Meanwhile, Xobni provides great context and social information around Outlook, and up-and-comer Etacts does similar things around Gmail (see our story from a couple days ago on Etacts’ first round of funding).

I’m of the thought that the next big thing in email is to make the inbox an app platform, where we can interact dynamically with our messages without opening another window. The new Hotmail has some inklings of this — for instance, through an “Active View” feature a USPS tracking code turns into a widget with delivery information displayed in the body of a message. Hotmail will also offer support for viewing and basic editing of Word, Excel and PowerPoint documents (though somewhat oddly, this functionality does not overlap with the recent launch of online document editing site in partnership with Facebook, which came from a separate team).

Here are some of Microsoft’s more interesting and unique feature additions to Hotmail:

– rich slideshow tools for photos attached to messages and links to albums on Flickr and SmugMug

– embedded videos from YouTube, Hulu and

– a Bing sidebar to easily add photos, maps and info such as movie times from the web. (This seems like it could be useful but is also totally weird — the demo example was to include clip art from the web in an email…is that really necessary?)

– a “Sweep” tool blocks newsletters by deleting all messages from that sender and blocking all future messages

– click on any name to view all from sender (one of my most-wanted Gmail tweaks, personally)

– Exchange ActiveSync for push email on mobile

The one implementation that seems a bit awkward for me is photo-sharing. While nice slideshow tools and increased attachment limits sound nice, the way this works in the new Hotmail is not something I’d use. The limit for total size of photos in a single message is now an astonishing 10 gigabytes. How does Microsoft go so high? It doesn’t actually transfer the pictures. Rather, it hosts them in the cloud on SkyDrive.

Here’s how it works: Recipients click through on the URL for the photos (even if they’re not on Hotmail). They must have Silverlight installed to view photos online; if not, they can download the attachments directly. The only people who get access to the picture URL are the recipients of the email. Invited users can tag people in the photos and add their own to the album if they have a Windows Live ID. Then, SkyDrive deletes the album three months after you post it (you’re allowed to extend this period indefinitely if you choose to).

Microsoft says this makes sense because many people email each other pictures, and most recipients only view them soon after they’re sent. In today’s Hotmail, 95 percent of storage is attachments, and 55 percent of attachments are photos. But personally I’d rather keep that nearing unlimited storage in my inbox, where attachments live for as long as I want them to. If I want to put pictures in the cloud, I’ll put them on Facebook or Flickr, where they can live within a connected context. But maybe that’s just me. If they removed the default three-month expiration I’d probably have less of an issue.

Update: A Microsoft spokesperson responded to this story via email, noting that the new Windows Live Messenger, which wasn’t prominently featured at the event, will include the ability to connect with and update social networks including Facebook, MySpace and Twitter from the Hotmail home page. She also said that visitors to SkyDrive photo albums who don’t have Silverlight installed will be able to view pictures online but not in the same animated slideshow.

Related content from other GigaOM sites:

– Email: The Reports of My Death Are Greatly Exaggerrated (sub req’d)

– Open Thread: Could a Better Hotmail Tempt You Away from Gmail?

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