Microsoft Gives Hotmail Facelift, Changes Name to Outlook

NEW YORK ( TheStreet) - Remember Hotmail? It used to be Microsoft's ( MSFT) popular email service. Not anymore. From this point on it will be known as

Microsoft has announced they've completed the arduous task of upgrading millions of Hotmail users to a new service with new and improved features. But the most important changes include increased compatibility with their SkyDrive cloud storage and Microsoft Office, plus some new mobile apps.

Like many of their famous software products (remember the original Excel?) Hotmail was not originally Microsoft's to begin with. It was originally introduced as a start-up service called HoTMaiL and made its debt on the Fourth of July, 1996. Microsoft purchased it a year later to compete with rival email systems from AOL's ( AOL) "You've Got Mail!" and others. At that time, Hotmail had pizzaz as it offered unlimited storage and was most importantly, it was free.

Over the years, Hotmail has gone through a variety of incarnations. It's been named MSN Hotmail as well as Windows Live Hotmail, each with new features and improvements. The last new version of Hotmail was released in 2011.

Hotmail remained popular because once someone uses a particular email address it's difficult to get them to change. As Microsoft finally pulled the plug on the Hotmail this week, the brand was the world's second largest Web-based email system (2012 numbers) with 360 million users. Google's ( GOOG) Gmail was number one. As of today, the new system boasts 400 million active accounts.

In addition to an updated mail interface, the new offers a more modern Calendar program as well as improved interoperability with Microsoft's SkyDrive "cloud", a new two-stage user authentication system, an updated app for Android devices and a preview of Outlook's upcoming integration with Skype.

To illustrate just how huge a task the switch was - Microsoft says they moved 150 petabytes of information to the new service in just six weeks. How large is a petabyte? It stands for 1,000,000,000,000,000 bytes. The progression goes byte, kilobyte, megabyte, gigabyte, terabyte, petabyte - each 1,000 times larger than the previous amount.

For the end user, the switch should be seamless. Microsoft assures everyone that they will still be able to use their Hotmail address with the new system.

Microsoft was gaining 0.8% to $33.41 in mid-day trading.

--Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's senior technology correspondent.