Microsoft has realised that it is unable to take on the combined force of social networking sites like Twitter and Facebook and instead decided to become an aggregator of content with its latest update to its Windows Live service.

"It's about keeping your life in sync", Ryan Gavin, senior director of product management, Windows Live told Pocket-lint in a briefing before the announcement of what Microsoft is internally calling "Wave 3".

The new range of services and tools aims to focus on making it easier to stay in touch with your friends regardless of whether they are Tweeting, Facebooking, Flickring or just using MSN.

The attack on your "Digital life" will come via new downloadable software and online services that "sync" your digital existence using traditional methods and "The Cloud" so you can access your information wherever you are.

On the desktop software side, in an alternative application to Outlook Express, Live Mail will allow you to pull all your POP3 email accounts into one application on your desktop and from there let you run multiple accounts switching between them with the press of a button.

The Calendar within the application has been given iCal support, which in real terms means you can connect and monitor other people's calendar's from Google for example, but also a list of birthday's from your Facebook friends list.

Boasting that Hotmail beats photo sharing sites when it comes to emailing pictures around the web, Microsoft has said that images can now be stored in The Cloud with a reference images sent in an email rather than the complete image. Users will then be able to access the full image to download if they want at a later date.

Microsoft's Photo Gallery application has been updated too, images can now automatically be synced with a second PC - you'll be prompted if you use the same Live ID tag, and menus have been simplified to promise a "two click to publish" mantra either online to other sharing sites like Flickr or print services for hard copies.

Get to IM and users will now get a status bar of their friends Twitter, Wordpress and a stack of other third party feeds (Microsoft has announced its signed 50 third party companies already) so they can see what's going on. Emoticons can now be personalised with videos and pictures of yourself and Groups means you can IM lots of people at the same time.

Move online and the hub is the Windows Live homepage, which like iGoogle and the Facebook profile page, works to provide you all the relevant information you need from on handy space.

"There are two types of world on the internet, the Real world and My world. The Live homepage focuses on the My world view with Real world information used to enhance it", says Gavin.

Rather than focus on news feeds from sites like Pocket-lint the main tab gives you feeds to Twitter, Facebook and other social networking sites like Yelp presented in a "What's new" area. The feeds, which work in a similar way to RSS, provide native links to the sites rather than allow you to interact there and then.

"You won't be able to update, however we are continuing to think about how to integrate it", says Gavin.

Beyond the status updates the service will be able to offer you "Friends in common" information stripped from your social network and Facebook profiles with the ability to email or MSN them, although Gavin confirmed that it isn't using the Facebook Connect technology.

SkyDrive, the Microsoft service that offers you a free online storage space is also getting a bump in specs from 5GB to 25GB off space in The Cloud to share files and images.

Hotmail will offer you Live Search in the same window so you can search for stuff as you email friends.

When can you expect to use Microsoft as your new social networking hub?

"We plan to start rolling out these features to our users in the next couple of weeks with the full roll out completed by the end of January."

We will keep you posted.