Microsoft has launched a new subscription Outlook service that will link closely with, and expand slightly, its Hotmail Webmail service.

Microsoft Office Outlook Live costs $59.95 per year and includes Office Outlook 2003 plus 2GB of online storage, spam and virus protection and the ability to send 20MB attachments.

All is not what it seems however. For years there has been a free link-up between Outlook and Hotmail, where Hotmail can be effectively run through the desktop e-mail software. But Microsoft announced at the end of September that this would stop with all new Hotmail accounts and stop for everyone else in April.

From April on, people will have to pay for the pleasure of having two Microsoft products that already work together seamlessly, work together. An existing service called Outlook Connector already does this, but so far Outlook Connector only comes as part of an MSN Premium package that costs $9.95 a month.

As such, Microsoft Office Outlook Live is "half-price" but a huge number of users will still baulk at the cost just for a simple data exchange. Since Hotmail already offers, for free, 250MB and 10MB attachments, and for $19.95 a year, the same 20GB and 20MB attachments on offer with Outlook Live, you have to wonder what Microsoft is thinking. Is an Outlook-Hotmail link really worth $40 to anyone?

The Webmail market has changed radically in the past few months thanks largely to Google turning previous pricing models on their head by offering 1GB of free storage on its new Gmail service. As such Microsoft appears to be taking a retrograde step by removing one of the few advantages it has over Gmail - simple integration with a common e-mail program.

"MSN is committed to delivering a range of free and subscription e-mail services to meet customer needs, and Outlook Live is the perfect addition to our portfolio. We're thrilled to offer the service to our customers," said Blake Irving, MSN vice president, more than a little disingenuously.

Outlook, while ubiquitous, is no Internet Explorer or Windows Media Player. People will get new e-mail software if they find it costs them money to use Microsoft's. Expect to see in the next few months lots of stories on and adverts for software that lets you connect to Webmail accounts with a desktop e-mail program.