Integration with Facebook and social networks
Hotmail is more than just email software --- it can also be your hub for social networking. When you first log in, you see updates from your contacts on Facebook, just as if you were on Facebook, but without logging in there. You can also post comments to contacts' updates. Hotmail even imports your contact information from Facebook.
In this way, you can get a quick glance of all of your contacts' updates on multiple social networking sites. At this point, more sites such as Twitter and LinkedIn need to be added. But that no doubt will come.
Gmail does none of this. Its Buzz social networking feature is meant to compete with sites like Facebook, not work with them, and fails at it.
Better mail handling
The new version of Hotmail has added a number of extremely useful features for handling mail. Quick View, for example, lets you quickly view mail by a number of pre-set criteria, including tagged mail, mail with photos, mail with Office documents, and even mail sent from shipping services such as FedEx.
Making it even more useful are the filters you can apply, such as unread mail, mail from contacts and so on. Combining Quick View and filters makes handling mail a breeze. You can see at a glance all unread shipping updates, for example.
Better mail threading
The new Hotmail learns from Outlook 2010 and adds a conversation view, which shows entire, threaded email conversations at once, so you won't have to hunt through all your mail to find emails. For some reason it's not turned on by default. You'll have to select Options --> More Options --> Conversation settings, select "Group messages by conversation" and click Save.
Gmail also has threading, but its exceedingly confusing to follow. You can't easily trace the history of a single conversation at a glance, as you can with the new Hotmail.
Great media content viewing
Hotmail has a feature that every email service and email client should copy --- the ability to view media content right within the service, rather than head out to a Web site. If someone sends you a link to a YouTube video, you won't need to click the link to head to YouTube to view it. Instead, you can watch the video from right within Hotmail. You can see an example, below.
The Microsoft Outlook Hotmail Connector integrates Hotmail with Outlook. Within Outlook, you can read your Hotmail email, send email via Hotmail, and so on, giving you the best of both worlds --- the sophistication of a fully featured email client with the accessibility of Web-based mail. True, there are ways you can use Outlook with Gmail, but the integration simply isn't nearly as good.