Microsoft this week updated Windows Live Hotmail with some pretty hefty improvements. This is notable for a number of reasons, the most obvious being the company just issued the latest Hotmail version back in May (see my review), just three months ago. And that update came after many, many years of testing. That the Windows Live team at Microsoft is able to turnaround revisions very quickly should never again be questioned: It's one thing to update a comparatively minor service, but Hotmail is used by 280 million active users. This is a big deal, folks.

You might think of this article as an update to the main Windows Live Hotmail review, one that's here just to make sure you have all the latest facts. Here's what's changed.

UI update

The most notable change is that the Windows Live Hotmail UI has been updated to conform to the attractive new Windows Live user interface style, which has been available on the new Live.com Web portal and elsewhere throughout the Live.com properties for a few weeks now. I really like it, but opinions differ. The new UI features a strongly rendered toolbar that extends across the width of the screen; on the left side of this toolbar is the Windows Live logo which, when clicked, reveals a cascading menu. Visually, the big change is the appearance of this toolbar. In the previous version, there wasn't a toolbar so much as there was a colored header area near the top of the screen. Now, the beginnings of a consistent and attractive Windows Live UI are appearing, and it's easy to see how this can work across multiple services.

One nice side effect of the UI change is that it makes the header area smaller, leaving more on-screen real estate for what really matters here, your email. You can also optionally turn off the Today page, which I certainly find annoying and completely unrelated to email. Now you can jump directly into your Inbox when you hit hotmail.com or mail.live.com. This is, of course, as it should be.

Storage

In case it's not obvious, we've suddenly reached the point with Web-based email where storage, finally, is no longer an issue. As noted in my original Windows Live Hotmail review, Microsoft feels that storage space should no longer be a concern for users when they're comparing services. And while Windows Live Hotmail roared out of the gate with "at least" 2 GB of storage for free accounts in May, as of this week, that amount has more than doubled to 5 GB. Meanwhile, paid Hotmail users--that is, those who have subscribed to Windows Live Hotmail Plus or MSN Premium--get 10 GB of storage.

OK, so Microsoft feels that storage shouldn't be part of the discussion, but the reality is that people like to compare things. And Hotmail's only real competition, Google's Gmail and Yahoo Mail, both offer more storage, even with this update. Gmail is currently at about 2.8 GB of storage and rising, though the company recently unveiled a way to pay for additional storage which can be used across various Google services like Picasa. (My Gmail account, for example, shows about 28 GB of free space.) Yahoo!, meanwhile, offers "unlimited" storage, though of course this is theoretical and for email only. (You can't use this space to store your music and photo collections.) Regardless, Yahoo!'s is the best policy and the one that Microsoft should follow. 5 GB is great and is likely more than most users will need for quite some time. But the company should just match Yahoo! and be done with it.

Performance and reliability improvements

As the Web-based email that perhaps offers the most impressive Web 2.0 experience (the new Yahoo! Mail, currently in beta, is similarly sophisticated), Windows Live Hotmail is also a bit of a drag, performance-wise. This is particularly problematic for those with less-than-ideal Internet connections. I've actually noticed these issues this month, as we're in France and suffering along with a pathetic ISDN connection that should have been outlawed a decade ago.

Microsoft has spent the past few months identifying which parts of the new Hotmail UI are causing the slowdowns and has fixed the biggest offenders. The company also tells me that it will continually work on performance going forward. Additionally, Microsoft is concerned about Quality of Service (QoS) issues, which is essentially the reliability side of the equation: You should always be able to access your email (assuming you're connected). To date, QoS on Windows Live Mail has been excellent, and as more and more people switch from the old system ("Hotmail") to the new ("Windows Live Hotmail"), the goal is to keep it that way.

Contacts de-duplication

Contacts duplication is an issue with all of the contacts management systems I've used, be them Web-based, as with Hotmail, or client-based, as with Microsoft Outlook. Inevitably, this has required me to occasionally move through my contacts list and manually remove (or more delicately, merge) contacts. Well, Microsoft feels your pain. With this new update, Hotmail will now add new addresses for existing contacts to the same contacts entry, rather than create new contacts as it did in the past. And there's a new wizard that will help you remove duplicate contacts.

Outlook integration

And speaking of Microsoft Outlook, Hotmail gains another cool and much needed bit of functionality: You can now tentatively accept or decline Outlook-based meeting requests, as you could previously in the older version of Hotmail. This is a huge integration win, and something we should expect of any Microsoft email product. (Can Windows Live Mail do this? I'm not sure.)

Better security

We're probably at the point where virtually any Microsoft product update will include some sort of security improvement, so it shouldn't come as any surprise that the company's August 2007 update to Windows Live Hotmail improves security, this time through enhanced Family Safety functionality and spam protection. For example, you can now optionally display content even from a message that Hotmail suspects is malicious, though you should obviously be wary of doing so. And you can click a "Report phishing" link if you receive a suspected phishing email.

On the spam front, you can train the spam filter by selecting improperly quarantined emails and clicking "Not spam." I assume that's obvious to most users.

But wait, there's more

If you don't see the changes described here, hold on: Microsoft says it is rolling out the new version over a few weeks, so it could take a while before they're reflected in what you see online. You can tell from the Mailbox usage stat on the Today page: If you see 2 GB or 4 GB of capacity, then you're still on the old version. You will see 5 GB or 10 GB of capacity if you're on the new version.

The most intriguing aspect of this update, perhaps, is that it's only the beginning. Looking ahead, Microsoft will continually update Windows Live Hotmail to ensure that it's answering users needs. While most of these future updates are unknown, I was told that the company will increase the amount of time that suspected junk mail is kept in users' Junk Mail folders in the near future. Similar measures will be taken for the Deleted Items folder as well. More vaguely, Microsoft notes that it will continue to evolve the service in the coming months, adding more features and integration points with other Windows online services.

Final thoughts

Windows Live Hotmail is a first-class Web mail solution that any Windows user should consider, and the update this month only solidifies that opinion. Naturally, there are improvements to be made: Microsoft should simply dispense with the storage limit and truly remove that as a talking point. And when is it going to offer live.com accounts to customers? For many people, a hotmail.com mail address is about as attractive as an address from AOL, though of course you're welcome to go the Windows Live Custom Domain route if you like the Hotmail UI but not the name. In the end, this update just makes things better, and Windows Live Hotmail is still highly recommended.