Microsoft has opted to launch a new web-based email service called Outlook.com rather than continue with their Hotmail offering, saying to AllThingsD that “We decided it was time for a new email service.”

Hotmail and Outlook.com will carry on a peaceful co-existence for the moment but Hotmail users will eventually be migrated to Outlook.com “…just because it is a hell of a lot better”, according to Microsoft’s Brian Hall.

Features of the new service appear similar to the latest version of Hotmail but the largest change seen is in the appearance of the inbox, which looks much more like a desktop email client that Microsoft’s previous webmails. Advertising is still present but it has been reduced in scale, perhaps correcting something that was an issue with Hotmail says Hall.

Outlook.com users will be able to collect all of the information about contacts into one place within the service, including info from Twitter, Facebook and other third-party sites. Skype video calls from within the inbox are a planned update and Hall says that Microsoft is building the web-based service to handle upwards of one billion accounts.

Source: AllThingsD