Microsoft takes another shot at Gmail and Yahoo with Outlook.com

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With Microsoft making a big push with its free email service Outlook.com, Google's Gmail and Yahoo Mail suddenly have a serious new rival.

Microsoft plans to begin moving Hotmail users to Outlook.com, which reportedly already has 60 million active users since the preview was released last July. The move to Hotmail is expected to be completed by summer.

The migration isn't supposed to disrupt Hotmail users. Their@hotmail.com email address, password, messages, folders, contacts, rules and other features will automatically move to Outlook.com.

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With the addition of Hotmail users to Outlook.com, the service will have a large built-in user base.

"By default, it already is a major email service because it takes over for Hotmail, which remained a major mail system," said Rob Enderle, an analyst with the Enderle Group. "The thing with mail, though, is people don't shift easily, because once folks know their email addresses, they don't want to change them."

Because Gmail is a strong and sticky brand, users won't be quick to abandon it for another service. That means Outlook.com would have to offer something more to make people switch.

"Defense is far easier than offense and Google should be able to do this," said Enderle. "Microsoft left Hotmail languishing for a long time and it bled users. This has to be reversed, and getting people to switch will not only take advancing the product but marketing it heavily."

Yahoo Mail, which hasn't had significant backing from Yahoo or significant user interest in recent years, could be more at risk than sturdier Gmail.

"Yahoo Mail hasn't had much investment over the years and is the most vulnerable," said Enderle. "I wouldn't be surprised if Yahoo and Microsoft came to some kind of agreement, like they did with search, so that Yahoo didn't have to continue to fund mail."

Microsoft's Bing search engine already powers Yahoo's sites.

Patrick Moorhead, an analyst with Moor Insights & Strategy, said Outlook.com has a good chance of being a significant rival to both Gmail and Yahoo Mail -- if it makes some upgrades.

"Outlook.com isn't going to make much of a dent in either Gmail or Yahoo Mail until they properly support their calendaring and address book," Moorhead added. "Outlook.com needs first to make it easy to import all mail, calendar and contacts."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com.