Microsoft takes aim at Google Gmail

Microsoft is so confident it has the internet’s best email service that it is about spend at least 30 million US dollars (€22.4m) to send its message across America.

The barrage begins today when Microsoft’s twist on email, Outlook.com, escalates an assault on rival services from Google, Yahoo, AOL and a long list of internet service providers.

As part of the process, all users of Microsoft’s Hotmail and other email services operating under different domains such as MSN.com will be automatically converted to Outlook.com by the summer, if they do not voluntarily switch before then. All the old messages, contacts and settings in the old inboxes will be exported to Outlook.com. Users will also be able to keep their old addresses.

Email remains a key battleground, even at a time when more people are texting each other on phones.

People still regularly check their inboxes, albeit increasingly on smartphones. The recurring email habit provides internet companies with a way to keep people coming back to websites. It gives them a reason to log in during their visits so it is easier for email providers to track their activities. Frequent visits and personal identification are two of the keys to selling ads, the main way most websites make money.

That is why Microsoft, Google and Yahoo have been retooling their email services in recent months.

After keeping Outlook.com in a “preview” phase since July 31, Microsoft is ready to accept all-comers.

To welcome new users, Microsoft is financing what it believes to be the biggest marketing blitz in the history of email. Outlook.com will be featured in ads running on primetime TV, radio stations, websites, billboards and buses. Microsoft expects to spend somewhere between 30 million US dollars (€22.4m) and 90 million US dollars (€67.3m) on the Outlook campaign, which will run for at least three months.

The Outlook ads will overlap with an anti-Gmail marketing campaign that Microsoft launched earlier this month. The “Scroogled” attacks depict Gmail as a snooping service which scans the contents of messages to deliver ads related to topics being discussed.

The Gmail ads are meant to be educational while the Outlook campaign is motivational, said Dharmesh Mehta, Outlook.com’s senior director.

“We are trying to push people who have gotten lazy and comfortable with an email service that may not be all that great and help show them what email can really do for them,” he said.

By Microsoft’s own admission, Hotmail had lost the competitive edge that once made it the world’s largest email service. The lack of innovation left an opening for Google to exploit when it unveiled Gmail nearly nine years ago.

Gmail is now the industry leader, although estimates on its popularity vary.

Google says Gmail has more than 425 million account-holders, including those who only visit on smartphones and other mobile devices. The latest data from research firm comScore, which does not include mobile traffic, shows Gmail with 306 million worldwide users through December, up 21% from the previous year. Yahoo’s email ranked second with 293 million users, a 2% decrease from the previous year, followed by Hotmail at 267 million users, a 16% decline from the previous year.

Microsoft, which is based in Redmond, Washington state, is counting on Outlook.com to catapult the company back to the top of the email heap. During the preview period, Outlook attracted 60 million account-holders, including about 20 million who defected from Gmail, according to Microsoft. Comscore listed Outlook with 38 million users during December.

The new features being introduced in Outlook include: the ability to send massive files, including hundreds of photos at a time, in a single email; address books which automatically update new contact information that connections post on Facebook, Twitter and LinkedIn; and about 60% fewer ads than Hotmail.

None of these features are revolutionary. Google has already been giving its users the option to switch to a new version of Gmail that also allows for larger files to be sent in a single email. And address books in Gmail already fetch new contact information posted on Google Plus, although it does not yet mine Facebook, Twitter and LinkedIn.

Google declined to comment on Outlook.com. The company, which is based in Mountain View, California, plans to convert all of its Gmail users to its redesigned format within the next few months.

Yahoo, which is based in Sunnyvale, California, revamped its email service late last year in an effort to provide a more consistent experience on personal computers and mobile devices.

Outlook.com is the latest in a series of major product leases from Microsoft, which has been struggling to regain the cachet that once made it the world’s most valuable technology company.

Now, both Apple and Google are worth more because they have been growing far faster than Microsoft as their products win more fans. Apple’s biggest gains have come from the iPhone and iPad, while Google has been benefiting from its dominance in internet search and its widely used Android software for mobile devices.

Microsoft has been trying to catch up with a major makeover of its Windows operating system, new smartphone software and a tablet computer called Surface. Like Outlook.com, all those products have been backed by expensive marketing campaigns in recent months.

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