Unless you've been living under a rock, you probably have noticed that Microsoft's once-laughable MSN unit is suddenly on a roll. After spending the first several years of its existence playing the punching bag to AOL's Rocky Balboa, MSN has found its footing and has reconstituted itself as Microsoft's consumer-oriented online services hub. The results have been astonishing: Products such as MSN 9 Premium, MSN Music (see my review), MSN Radio Plus, MSN Search beta, MSN Messenger 7 beta, and MSN Toolbar Suite beta (see my preview) are all excellent, and just a subset of the overall services and products now being offered by MSN. And as a matter of full disclosure: I use every single one of the MSN products and services I just mentioned, virtually every day in most cases. That makes me an MSN customer, I suppose, and I find that fact rather amazing. Something very positive is happening at MSN.

Microsoft Office Outlook Live is just the latest sign of that change. A subscription offering that combines Microsoft's popular Outlook 2003 application with MSN's Hotmail Plus service and Microsoft Office Outlook Connector software, Microsoft Office Outlook Live (MOOL) provides an interesting solution for power users who are accustomed to Outlook. Until recently, Microsoft had allowed non-paying Hotmail subscribers to utilize the company's Outlook email application to access their email. But in September 2004, the software giant announced that it was dropping this support, and would be requiring non-paying users to access the service only via its (admittedly well-made) Web interface. Previous users were grandfathered, however.

In a somewhat confusing move, Microsoft couched the September 2004 decision as a security concern. As I reported at the time, Microsoft said that spammers were abusing the WebDAV-based technology that made Hotmail access from Outlook and Outlook Express possible. "Since we implemented Human Interactive Proof (HIP) to ensure that only humans and not automated systems were opening Hotmail accounts, spammers have found other ways to go after the system," MSN Lead Product Manager Brooke Richardson told me at the time. "Recently, there's been an increase in exploits of the WebDAV protocol, which is used to enable people to access Hotmail from Outlook and Outlook Express. We've offered [this access] for free for some time, although it's typically a feature that other email providers charge for. But because of the rise in abuse of this protocol, we're making a change to WebDAV to curb abuse. Over the next few months, we're transitioning WebDAV to be available only to customers of our subscription services, such as Hotmail Extra Storage and MSN Premium. We expect this change will help us to more effectively stop spam emanating from Hotmail."

OK, I know that sounds like baloney. But I see some interesting points in those comments. It doesn't make sense to offer advanced features to non-paying customers of an online service, because that sort of thing will attract hackers as noted. Paying customers are far less likely to abuse the service they're using. Furthermore, from a business standpoint, Richardson is right: Other services do tend to charge for more sophisticated access to email. While we might not like it much as potential customers, it behooves MSN--and Microsoft--to find viable revenue streams. Non-paying Hotmail customers can continue using the service for free via the Web. But for whatever it's worth, 95 percent of Hotmail users were accessing the service through the Web prior to the September 2004 decision, Microsoft tells me.

The remaining 5 percent is an interesting market. Microsoft says that there are currently over 187 million active Hotmail users. Five percent of that market is 9.35 million people. To put that group in perspective, that's almost as large as the entire Mac OS X user base. But the potential is much higher. If Microsoft could just convert a small percentage of its freebie Hotmail account holders to paying subscribers, well ... there's money in them thar hills.

To up-sell Hotmail customers, MSN has tried a number of tactics over the past few years. The popular Hotmail Extra Storage offering evolved into Hotmail Plus when MSN boosted the base email storage allotments at Hotmail from 10 MB to 250 MB late last year. Hotmail Plus costs $19.95 a year and provides a number of improvements over the free Hotmail service. First, subscribers get 2 GB of email storage space. They can send 20 MB of attachments per email message. There's no account expiration worry (free Hotmail accounts can expire after 30 days of inactivity). Subscribers don't have to suffer through advertisements while using the Web-based email client. And, if they already have a recent copy of Microsoft Outlook, they can use that to access their Hotmail account.

That last bit is interesting. Many users, of course, don't have Microsoft Outlook. Thus was born Microsoft Office Outlook Live (MOOL), the latest MSN subscription service which aims to reduce the pain of accessing Hotmail. MOOL subscribers get the latest version of Microsoft Outlook--dubbed Microsoft Office Outlook 2003 for Subscription Services (Outlook SS)--plus all of the benefits of Hotmail Plus, for just $59.95 a year (it's only $44.95 through April 19, 2005). To put this in perspective, that's $40 for a fully functioning version of Microsoft Outlook (or just a paltry $25 during the initial offering period). When you consider that Microsoft Outlook 2003 costs about $90 retail, that's not a bad price at all.

Also notable is the fact that MOOL represents the first time Microsoft has ever made an Office product available as a downloadable subscription service. "We're really excited by the collaboration between MSN and the Office team," MSN product manager Karen Muskops told me. "Microsoft Office Outlook Live provides the power of both Outlook and Hotmail together in one place." Outlook SS is a fully functioning version of Outlook 2003, with virtually all of the features and functionality you've come to expect from Outlook. There are a few things missing, however: Muskops said that only some foreign language proofing tools and enterprise-oriented tools like SharePoint integration were removed, not the types of things normal users would ever notice. I wasn't able to test Outlook SS in time for the initial version of this review, but I'll be looking at it very soon and will discuss any other differences I can find here.

Using Microsoft Office Outlook Live

Like MSN Premium, MOOL uses the Microsoft Office Outlook Connector to provide Hotmail access inside of Outlook. This means that you can access all of your Hotmail account's services--including email, contacts, calendar, and tasks--from within Outlook, or via the standard Web interface. When you make a change at either location, it will be reflected in both. That is, when you add a calendar entry from the Web interface, it shows up automatically in Outlook the next time you logon that way. The reverse is also true.

When you purchase a MOOL subscription, you supply your existing MSN/Hotmail account or create a new one. That account is then upgraded to the equivalent of a Hotmail Plus subscription, plus you're provided with download links for Outlook and the Microsoft Office Outlook Connector (Figure), which are the two features that differentiate this offering from Hotmail Plus. Outlook SS is a 60 MB download, a huge decrease over the size of the retail version of Outlook. "They really reduced it for Outlook Live," Muskops told me. "It should take 15 minutes or less to download with a broadband connection."

When you first use the Connector from within Outlook, you sign into Hotmail via Passport (Figure) and then Outlook is configured with your account information. Unlike the older system under which you could access Hotmail from within Outlook, the Connector changes Outlook in various ways, providing you with something that is very much like Exchange Server access. That is, you can now access all of the components of your Hotmail account--email, contacts, and calendar--as you might expect, not just email. You can also view Hotmail components side-by-side with data from other email accounts. For example, let's say you use the local calendar feature to manage appointments. Once you install the Connector, you can view this local calendar side-by-side with your Hotmail calendar (Figure). You can also drag and drop appointments between them. You can even view three or more calendars side-by-side, including one from a work-based Exchange Server. And if you use some sort of service or product that synchronizes with Outlook data--like ActiveSync with a Pocket PC or Windows Powered Smartphone--you can configure Outlook to synchronize with your Hotmail account data without having to use third party tools like Intellisync. Nice!

When you're accessing an MSN or Hotmail account from within Outlook, you'll see a new Mailbox Status toolbar, assigned to your account, that supplies a server status drop-down (Figure) listing your mailbox storage usage and connectivity between Outlook and Hotmail's email, contacts, and calendar components. If you are working offline--another key feature of this offering--the toolbar notes that you are disconnected as well (Figure). All of your Hotmail email, contacts, and calendar tools still work, however, and when you reconnect, any changes you've made are synched with the server, and any emails you've written are sent.

If you choose to cancel your subscription after the first year, Outlook will continue working, though the subscription-based features, like calendar sharing, will now longer function, of course. Muskops told me, however, that users are legally bound by the end user license agreement to stop using the product at that time.

Conclusions

Microsoft Office Outlook Live is a logical extension of MSN's subscription-based Hotmail offerings, and a great bargain for users who don't already own Outlook, especially if you sign-up before April 19. Designed largely for power users--Outlook isn't exactly a tool for neophytes--MOOL will likely appeal most to people who need to access both Exchange-based email and personal information data from work and Hotmail-based home email, and would like to do so in a single application. For example, MOOL makes it easy to compare your home (Hotmail) and work (Exchange) calendars side-by-side, and then make decisions about your schedule. Home users who are interested in MOOL's calendar sharing functionality should consider the company's MSN Premium offering, a $9.95 a month service that also provides a friendly interface, client-side anti-virus and firewall solutions, parental controls, and other features that make more sense to consumers (MSN Premium also includes the Outlook Connector, but you need to supply your own copy of Outlook to use it). Overall, MOOL is a great deal for those who use Exchange at work and Hotmail at home.