In doing so, the company is also making a mighty big decision to sunset its Hotmail brand and "upgrade" those users to the new Outlook.com service. Hotmail users can still use their Hotmail email address.
"It’s not a light brand decision," said Dharmesh Mehta, senior director of product management for Outlook.com and SkyDrive. "I don’t know of any other company that has hundreds of thousands of users and has changed the brand name. But this is something new, an opportunity to set us up for the future."
Microsoft is going through a historic period, overhauling just about every major product it offers. Last fall, the company unveiled the new Windows 8 operating system, geared toward mobile devices and touch screens. Then came Windows Phone 8 and the company's first tablet, Surface. And more recently, Office 365, which integrates a more cloud-based approach to the company's suite of productivity software.
Phew. In that context, a change in Web mail may not feel as epic. But it's still a big departure for Microsoft and will affect hundreds of millions of longtime users.
For many consumers, AOL may have been their introduction to email. But Hotmail was their introduction to the concept of Web-based email.
Though Hotmail has since been eclipsed by Gmail in terms of number of users, it's still a large service, with 300 million users, according to Microsoft. Google claims Gmail has 425 million users.
So why change?
Across the board, Microsoft is trying to reinvent all its products to embrace the cloud. And that meant that as its Outlook email was updated, the company knew it needed to have a better Web-based component. Since starting the beta testing for Outlook.com six months ago, the service has grown to have 60 million users.
In the end, having two Web-based branded services was likely going to be confusing for customers. Mehta said the choice of which to pick was tough, but clear.
"Outlook equals email for Microsoft," he said.
On a practical level, Hotmail users will be able to keep their old email and login information. But when they log in, the interface will be changed, or "upgraded" as Mehta puts it, to the cleaner Outlook.com look. And users will see Outlook rather than Hotmail when they use the service.
"There’ll be some bumps as we help people transition through this," Mehta said.
But Microsoft expects the benefits to far outweigh any headaches. The new design better matches the look and feel of its new Windows 8 operating system that launched last Fall. Mehta says there will be fewer ads splashed on the page, the header is much smaller, putting the focus on the email window, and the service makes it easy to integrate contacts from social services such as Facebook, Twitter and LinkedIn.