This is their Hotmail replacement. The article is from their Outlook Blog.
“Recently, we talked about how we’ve reimagined cloud services for Windows 8 and Windows Phone. And we described new apps for Windows 8, updates to SkyDrive, and how cloud services power the new Office Preview, We’ve also been hard at work on a mission to reimagine personal email – from the datacenter all the way to the user experience. Today, we’re starting to deliver on that goal with a preview of the new Outlook.com – modern email designed for the next billion mailboxes.
Webmail was first introduced with HoTMaiL in 1996. Back then, it was novel to have a personal email address you could keep for life – one that was totally independent from your business or internet service provider. Eight years later, Google introduced Gmail, which included 1 GB of storage and inbox search. And while Gmail and other webmail services like Hotmail have added some features since then, not much has fundamentally changed in webmail over the last 8 years – though yesterday’s frustrations about the small size of inboxes are now things of the past. At the same time, email is becoming less and less useful as inboxes become cluttered with newsletters and social updates, and people increasingly keep up their personal connections in social networks instead of their email address books. All of this has led many to hope for a better solution so you don’t have to settle for today’s webmail.
We think the time is right to reimagine email. So today, we’re introducing a preview of Outlook.com. We realized that we needed to take a bold step, break from the past and build you a brand new service from the ground up. You already know Outlook via the Outlook desktop application-for PCs and Macs-as the world’s most popular application for reading email, managing a calendar, and connecting to people. And you may have used the Outlook Web App connected to Exchange Server in your organization. Now, in addition to a desktop application and a service for businesses, we’re offering Outlook as a personal email service – Outlook.com.”