Microsoft Reinvents Hotmail with New Features, The biggest makeover in history, My opinion- "Google will lose on grounds of webmail soon!"

Microsoft has announced a huge slew of upgrades to Hotmail to make it more competitive with Gmail, and we have to admit the list is impressive.

With 343 million users, Hotmail is still the top e-mail service provider. Gmail () is much smaller, with approximately 150 million users as of September 2009.

Gmail has been adding features relentlessly in the past couple of years, however, and the sleek integration with other Google () services has made it the fastest growing webmail. And just like many other Google services, it also happens to generate the most buzz in the media.

Among the new Hotmail features are Hotmail Highlights, which gives you a quick overview of what’s new in your inbox organized by source, such as e-mail contacts or social contacts from Facebook () or Twitter (). This reminds me of the way Windows () 7 “simplifies” the control panel and many other Windows features. Still, this new view is definitely clean and simple, and I’m sure many users will get used to it quickly.

The Sweep function is touted as a simpler alternative to e-mail filtering, enabling you to quickly organize the e-mails that aren’t exactly spam, but that you don’t want at the top of your inbox. It’s not groundbreaking, but it’s simpler than Gmail’s filtering options.

The new Hotmail is also integrated with Office Web Apps, meaning that you can edit documents directly from your inbox. You can also store the documents and photos you send on Microsoft SkyDrive, which means you don’t have to worry about size constraints because your documents reside in the cloud.

Microsoft also took document integration a step further when it comes to consuming content. If you receive a video from Hulu () or YouTube (), you can view it right there in the inbox. If you receive attached photos, you can see them in the form of a nifty slideshow, provided you have Silverlight installed.

Finally, Microsoft mentions some other features it hasn’t discussed in detail, including: enhanced account protection, full-session SSL, multiple e-mail accounts, subfolders, contact management and ever-growing storage. All in all, you could say it’s a catchup effort, but we’ll give Microsoft the benefit of the doubt and call it a complete overhaul. It’ll be hard to steal users away from Gmail — which still has dozens of minor features that Hotmail doesn’t (just check the Labs) — but Hotmail will most likely be a worthy competitor after the new version is launched this summer (July- August).