SAN FRANCISCO, Feb 19, 2013 – Microsoft began moving Hotmail users to a free, beefed up Outlook.com email service on Tuesday, aiming to grab back territory largely dominated by Google’s multi-faceted online offering.
Microsoft’s move follows a test phase in which it adapted the service to try and better serve lifestyles that now increasingly revolve around smartphones, tablets, social media, and software “rented” as a service online.
The number of active accounts on Outlook.com grew to 60 million in just six months during the preview period, Microsoft said, stressing that it lets users connect to Facebook, LinkedIn and Twitter.
The US software titan plans to gradually coax owners of the approximately 360 million Hotmail accounts globally to new Outlook.com addresses, which will be better synched to other Microsoft services, such as its Bing search engine.
“Starting today, Microsoft will begin to upgrade every Hotmail user to Outlook.com,” the company said in a statement.
“The upgrade is seamless and instant for Hotmail customers; everything including their @hotmail.com email address, password, contacts, etc., will stay the same.”
Microsoft, based in Redmond, Washington state, also synched Outlook.com to its SkyDrive service for storing digital data online at datacenters and tailored it to fit the firm’s freshly released Windows 8 operating software.
“This is a huge redesign,” said analyst Wes Miller of Directions On Microsoft, an independent firm that tracks the technology colossus.
“The product is infinitely more usable than Hotmail was.”
Launched in 1996, Hotmail was among the first Web-based email services.
However, Microsoft let Hotmail drift as rival Google won fans to free Gmail service tied to the Internet titan’s array of online products, according to analyst Rob Enderle of Enderle Group in Silicon Valley.
“Google clearly attacked Hotmail,” he said. “It was a strategic mistake to let Hotmail languish as much as they did.”
Email services serve as “beachheads” Internet firms work from to get people to use other products such as search or hosted data storage.
Google also scans email messages for keywords that provide clues for smartly targeted money-making online ads. For example, if home loan refinancing is mentioned in a Gmail message, ads from mortgage sellers might appear.
However, Microsoft has lambasted the Google revenue tactic, issuing ads that say “Don’t Get Scroogled,” referring to Google’s mining of Gmail messages.
Microsoft’s revenue effort will involve enticing Outlook.com users to pay for upgraded online services, such as additional SkyDrive storage capacity, or subscription to use of the cloud-based suite of Office 365 software programs.
Microsoft will also likely capitalize by weaving into Outlook.com easy use of the Skype Internet telephony service it bought about two years ago in a deal valued at $8.5 billion.
“Obviously, your end game is to get people to use advertisement-support services or, preferably, from subscription services like Office 365,” Miller said.
“Google is pretty clearly the main target but obviously there are some chances of ricochet as well,” he continued, noting that the challenge will also hit free Web-based email services by Yahoo! and AOL.com.
Yahoo! already uses Microsoft’s Bing search tool to power online searches at its websites and may further the alliance with an email partnership, according to the analyst.