Microsoft has announced that Hotmail is in for a major overhaul with an array of new features that it hopes will put pressure on its webmail rivals such as Gmail.

The best new feature, by far, is the Active View function. What this means for users are emails that give rich previews to any media linked within the body such as YouTube, Hulu and Justin.tv videos and impressive slideshows for photo services like Flickr.

Windows Live Messenger will also be integrated into the Hotmail UI, in a similar way that Google has conversations in Gmail. Because it's Windows Live Messenger though, you'll be able to chat to more than one contact within a session.

Hotmail is also taking office into the cloud, just like Google Docs. Users will be able to read and amend office documents without the need to download them to their PCs.

“With over 360 million active Hotmail accounts worldwide, we have spent a lot of time listening to customer feedback and thoughtfully designing solutions to meet their needs”, said David Law, Windows Live Product marketing manager. “Whether it’s organising events, managing commercial transactions, searching for jobs, sharing photos, or communicating with friends and family, the new Hotmail will help increase personal productivity”.

Whether the changes will be enough to make people switch from Gmail and the like remain to be seen. Although the features do look appealing, the hassle of setting up a new email account and notifying all of their contacts may be too much of a bother for some people.

Will you bother switching? Let us know.