In his blog post about the new service, Microsoft’s Chris Jones summed up the feature. “Outlook.com automatically sorts your messages from contacts, newsletters, shipping updates, and social updates,” wrote Jones, “and with our Sweep features you can move, delete and set up powerful rules in a few, simple clicks so you can more quickly get to the email you really want.”

Another mail management feature that I like in Outlook.com is that you can hover over a message and get a set of actions to delete the message or flag it as important or sort it to a folder — and you can even customize the functions you want to see on the hover-over.

2. Mobile experience

The biggest benefit that Microsoft has in designing a new webmail service in 2012 is that it can optimize it for today’s intensely-mobile world.

“The way people do mail on their mobile phone tends to be a little different,” said Brian Hall, General Manager of Windows Live and Internet Explorer. “They don’t do as much mail management.”

With that in mind, Microsoft used the automatic folder feature as its way of helping organize and prioritize users’ inboxes in a way that can work in virtually any type of desktop or mobile email client.

“Most people on a phone or tablet use the native mail client,” said Hall. “In those instances you want to make sure you work with any inbox. It’s a different approach than Priority Inbox from Google because they have to go create clients for mobile or else it breaks Priority Inbox.”

Hall also stressed that Microsoft is focused on delivering an excellent mobile web experience. In fact, the company is so focused on the native client and mobile web experience of Outlook.com that it doesn’t currently have plans to build an app for Microsoft’s own Windows Phone 7. ”It works beautifully with the native client,” said Hall.

On the other hand, he said they are working on an Android app, because “Android devices are less likely to have an Exchange ActiveSync client.”

3. Privacy protection

One of the creepiest parts of Gmail has always been the fact that it does text-mining on your emails and uses that information to surface targeted ads. That’s the price you pay for unlimited storage and a free service. For example, if you’re emailing back-and-forth with a family member about a trip to go hiking, Gmail will simultaneously surface text ads for things like Rocky Mountain vacations, hiking boots, and protein bars. While these ads are generally unobtrusive and occasionally even useful, it still freaks out some people to realize that Google is essentially “reading their mail.” This is especially true for business professionals and others who use email to transmit potentially valuable or sensitive information.

Capitalizing on this uneasiness, Microsoft is promising that Outlook.com will not do text-mining on your inbox, while still offering its service for free and with “virtually unlimited storage.”

“We don’t scan your email content or attachments and sell this information to advertisers or any other company, and we don’t show ads in personal conversations,” Jones stated.

That doesn’t mean Outlook.com won’t have ads. There are right-column ads on the main inbox screen, but there aren’t ads on individual messages. Also, I’m sure these ads are going to be targeted based on what Microsoft knows about you in general, just not on the content of your individual messages.

4. Social integration

One of my favorite plug-ins for Gmail is Rapportive, which fills the right column in Gmail with contact information about the person you’re emailing. It draws that information from LinkedIn, Twitter, and Facebook (once you’ve logged in to those services) and will even show you the LinkedIn job title and latest status updates from the contact you’re emailing.

Microsoft has taken this kind of functionality and built it directly into Outlook.com, filling the right column of its message screen with this same kind of social contact data, but displaying it in a little bit simpler, cleaner way that follows the Metro UI style. Outlook.com doesn’t appear to show quite as much data as Rapportive.

However, Microsoft has taken social integration a step further. You can not only view people in your social networks from within Outlook.com and see their latest updates, but from the “People hub” you can also respond to status updates on Twitter and write on someone’s Facebook wall, all directly from Outlook.com. You can also do Facebook chat within Outlook.com. The instant messaging functionality itself is another strong feature of Outlook.com. The implementation is certainly better integrated and more usable than GTalk in Gmail.

Bottom line

Hall said Microsoft was focused on several key priorities in Outlook.com: ”Clean UI, design for tablets and all devices, connected with the services you actually use (Twitter, Facebook, LinkedIn), works great with [Microsoft] Office and SkyDrive, and actually prioritizes your privacy.”

Before I took a look at Outlook.com, I couldn’t imagine that there was much Microsoft could do to innovate in webmail, and I expected it to feel like a desperate late attempt to make Hotmail relevant by copying Gmail. While Outlook.com is definitely aimed squarely at Gmail, I was surprised at how fresh it feels. There’s some really useful innovation in there, and I think it’s really smart for Microsoft to go after Google on privacy. It means Outlook.com won’t be nearly as powerful of a money-maker as Gmail, but it could build some needed goodwill from users.

I also like that Microsoft isn’t afraid to admit that this is aimed directly at stealing some of Gmail’s thunder. Hall said, ”If you’re a heavy Google Docs or a Google+ user, then Gmail is probably for you. Otherwise, if you use Facebook, Twitter, LinkedIn, and Office, then Outlook [dot com] is better.”

The past week has been a big one in the email space. We told you about AOL’s big new redesign, and then Google integrated Google+ Hangouts into Gmail. Now, Microsoft is dropping Hotmail in favor of a new, rebranded web mail service based on its other popular email brand: Outlook.com.

The company announced the launch of a preview of the service, which it describes as “modern email designed for the next billion mailboxes.”

Here’s what it looks like:

Here’s a walkthrough of the features:

“Email isn’t just about the browser anymore. In fact, email represents 20% of the time we spend on smartphones, and is used extensively on tablets as well as PCs,” says Microsoft’s Chris Jones in a blog post. “Outlook is designed cloud first, so all of your mail is always available wherever you are. Its fresh, clean user interface gets the clutter out of your way-the header has 60% fewer pixels and there are 30% more messages visible in your inbox that the webmail most people are used to. And there are no display ads or large search boxes that take up extra space. Outlook.com also uses Exchange ActiveSync, so it powers your mail, calendar and people experience on your smartphone, tablet, and the new Outlook 2013 Preview.”

New users can get an @Outlook.com email address. Users of Hotmail can upgrade their account, and will be able to send/receive email from @hotmail.com, @msn.com or @live.com addresses. Users of other services like Gmail or Yahoo Mail can set up a new @outlook.com address, and have their other accounts forwarded.

There’s a mobile set-up guide here.

It will be interesting to see if Outlook.com is able to make a bigger dent in the webmail market for Microsoft.

What do you think of it?