Hotmail needed this major revamp. Although analysts plug the e-mail service as the most popular worldwide, with more than 360 million users, Microsoft was losing mind share in the category to robust competitors such as Google's Gmail. And no wonder: While Gmail added round after round of nifty little features (including chat, viewing document attachments online and the ability to watch embedded YouTube clips), Hotmail's features seemed to be gaining little more than a thick layer of dust.

"Of late, Gmail has been first with a big inbox, the first with IMAP ... and because of those firsts, it has good buzz going with it," Microsoft Vice President Chris Jones told The New York Times May 18. "There were features people expected to have in e-mail that we haven't had."

Still, spring's a time for renewal; and with Microsoft devoted to revamping its online brand--look no further than its recent redesign of MSN Mobile and the MSN homepage, now with lots of aesthetically pleasing white space, or the upcoming version of Windows Live Messenger--Hotmail's time had finally come for a tune-up.

The first order of business, apparently, was eliminating clutter. The new Hotmail will offer one-click filters to show, say, which e-mails come from your personal contacts, or from social networks such as Facebook. This is especially useful, considering that some e-mails ("Chained to wall in Charlie Sheen's basement. Call police.") rank way higher than others ("Rebecca sent you a message on Facebook: 'OMG Fries!!!!!!'") in the universal order of importance. Inbox Search Auto-Complete suggests possible searches as you type a term into the search box; Conversation View displays an entire e-mail thread in a single pane; View All From Sender does the obvious.

In addition, Hotmail now includes tools for eliminating all those e-mails from those nice dying widows who want to give you $50 million: Microsoft SmartScreen, which attempts to distinguish between legitimate e-mail and spam, Trusted Senders, responsible for the small logo that appears next to e-mails that Hotmail considers legitimate, and Individual Preference Auto-Learning, which monitors your behavior to help judge which e-mails are spam and which are actually real.

For people who use their e-mail primarily for work, Hotmail catches up to Gmail by allowing Office documents included as e-mail attachments to be opened on a PC without Office installed.

"With the new Hotmail, you can attach an Office document to an e-mail and have it stored on [Windows Live] SkyDrive," Dick Craddock, group program manager for Windows Live Hotmail, wrote in a May 17 posting on The Windows Blog. "Hotmail then sends the document via SkyDrive so that you--and the people you send it to--can access it from anywhere regardless of whether they use a PC or Mac, have Office installed, use Hotmail or don't, or have smaller attachment limitations than the 10GB per message allowed by Hotmail."

In addition to that feature, Hotmail now leverages Windows Live SkyDrive to allow up to 10GB of photos to be sent in a single e-mail--users can flip through the images as a slide show, or download them.

All this integration with Windows Live, as well as other social-networking services such as Facebook (Hotmail incorporates the unified contacts list from Windows Live services--which includes contacts from Hotmail, Messenger and social-networking sites), has certain benefits: You can transfer large files via the cloud, keep your sprawling Web presence at least a little more organized and limit the number of passwords to forget. However, I can't help but think this represents another prime example of a company using that sort of integration, and those benefits, to tie its users into a particular product stack.

For other companies, it's a clear strategy: Look at the Apple mobile ecosystem, where you can quickly find everything from your contacts to your Magnetic Fields b-sides locked into your Mac, iTunes and iPhone; or Google's ecosystem, which makes it annoying to own an Android device if you don't have a Google account. If you don't mind using one company's products for a broad range of functions, then this sort of tying-in is unlikely to bother you, but it also makes it that much harder to incorporate a rival product or service into your daily activities--the inability to sync my iTunes with the Nexus One, for example, is rapidly becoming a deal-killer.

When I hear about something like Hotmail incorporating a broad range of services into its platform, then, I can see immediately how it's a good thing for users--but I also wonder about the trouble those users will need to go through, if they choose to leave at a later date, in order to pry themselves from the system.

The new version of Hotmail is due sometime in summer 2010.