Microsoft has started migrating Hotmail users to the newly branded Windows Live Hotmail, a major upgrade of its popular web mail service.

Windows Live Hotmail, called the biggest Hotmail upgrade since the service's debut in 1996, has been tested by about 20 million users since Microsoft first allowed outsiders to try it out in mid-2005, said Brooke Richardson, Microsoft group product manager.

"It is safer, faster and has more features than Hotmail. It's definitely an advance for our current customers," she said. Windows Live Hotmail has a brand new code foundation which will let Microsoft add improvements quickly, something that had become a challenge with Hotmail's decade-old code base, she said. "It's a much more stable foundation for us to innovate," she said.

A major challenge for Microsoft will be to convince long-time Hotmail users that the upgraded version is worth switching to, said Van Baker, a Gartner analyst. "Consumers get accustomed to things they use on a daily basis, like their email service," he said. "When you make changes, sometimes it's a challenging transition for consumers."

Microsoft will not autocratically move users to the new version. For now, Microsoft will give Hotmail users the option to continue using the old version. However, at some point, everyone will be unilaterally migrated over to Windows Live Hotmail, she said.

New users will be automatically signed up for Windows Live Hotmail but, like any user of the new service, they will get to choose from two user interfaces: a "classic" layout that closely resembles the old Hotmail; or the new interface, which was designed to look like Microsoft's Outlook, she said.

Later this month, Microsoft will release free software for linking Windows Live Hotmail with Outlook, a capability the company previously charged for. With Microsoft Office Outlook Connector for MSN, users of the web mail service will be able to access their account from Outlook, along with email, contacts and folder synchronisation for free. In the future, Microsoft will release a desktop client for Windows Live Hotmail called Windows Live Mail. Windows Live Mail will be the successor to Outlook Express and Windows Mail on Windows Vista.

But all these different names, brands and components leave Microsoft with a fragmented story in the Web mail market that could lead to consumer confusion, Gartner's Baker said. "Another big challenge is to manage this message," he said.

In terms of security improvements, each email message carries a "safety bar" which indicates whether the message came from a known, unknown or potentially fraudulent sender. Spam protection has also been enhanced. Windows Live Hotmail also has a mobile version so that its estimated 280 million users can access the service from cell phones and handheld devices with a web browser.