Microsoft officially launched its Outlook.com email service this week, while simultaneously announcing the end of its other popular service, Hotmail.

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 don't 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 @hotmail.com addresses.

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 to $90 million US on the Outlook campaign, which will run for at least three months.

"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," explained Dharmesh Mehta, Outlook.com's senior director.

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. The latest data from research firm comScore, which doesn't include mobile traffic, shows Gmail with 306 million worldwide users through December, up 21 per cent from the previous year.

Yahoo's email ranked second with 293 million users, a two per cent decrease from the previous year, followed by Hotmail at 267 million users, a 16 per cent decline from the previous year.

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 that automatically update new contact information that connections post on Facebook, Twitter and LinkedIn.
  • About 60 per cent fewer ads than Hotmail.