Microsoft Plans `Significant' Hotmail Upgrade

Microsoft Corp., the world’s largest software maker, is upgrading Hotmail to make it easier to manage the flow of photos, videos and social-networking updates to a user’s inbox.

The new version, scheduled to be released in July or August, is designed to allow easier document sharing and provide a quick view of photos and videos at the top of e-mails. The upgrade also helps users easily send photos, videos and other media, along with Web links, to their contacts.

Microsoft, which sells ads next to Hotmail inboxes, is updating the service to attract users from rivals such as Yahoo! Inc. and Google Inc. While Hotmail is the leading e-mail service worldwide, it’s No. 2 in the U.S. behind Yahoo Mail, according to ComScore Inc. in Reston, Virginia. Google’s Gmail, the fastest-growing of the leaders, was third.

“This update, I think, is the most significant one we’ve ever done,” said Chris Jones, a corporate vice president at Microsoft. “We are already second. We hope this is a product that can take us to first.”

Microsoft, based in Redmond, Washington, fell 21 cents to $28.60 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have fallen 6.2 percent this year.

With the Hotmail upgrade, users can quickly see whether they have e-mails from friends and social networks, along with messages about package shipments or appointments, without sorting through the inbox. Another feature, called “sweep,” lets users clean out or move a block of similar e-mails with a few clicks of the mouse.

Source: Microsoft Corp.Inc. via Bloomberg

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The hotmail.com website.

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Source: Microsoft Corp.Inc. via Bloomberg

The hotmail.com website.

“They’re taking it more seriously and really trying to make it competitive,” said Matt Rosoff, an analyst with Directions on Microsoft in Kirkland, Washington. He said some of the new features close the gap with Gmail’s offerings. “I think it’s a really good service now.”

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

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