'Wave 3' of Windows Live Hotmail will offer IM

Microsoft has begun promoting the "Wave 3" Windows Live Hotmail update that promises a UI and functionality upgrade that will make the web-based mail client more like Outlook.

The UI upgrade, according to Microsoft, will be a combination of Hotmail's Classic and Full versions, listing the mailboxes' content to the left of a central "reading pane." In addition, Microsoft is promising more "cool stuff," which includes an increased amount of storage, and integration with other Live services like Calendar and Messenger.

The addition of all these features bring Hotmail even closer to Outlook in functionality. Microsoft's signature e-mail and communication software has already been offering in-window IM, along with calendaring in its "to do bar".

These changes are a part of Microsoft's Live suite evolution, which has been broken into "waves." Last year, Live Wave 2 established Redmond's presence in the cloud by offering desktop software for services such as Live Hotmail, Messenger, Search, and Photo Gallery; and introducing services such as Skydrive.

Wave 3 has begun the integration of many of its existing services with each other, and will culminate in the rollout of services like Groups, FrameIt, and Windows Live Movie Maker.

[M.E.'s NOTE: News of these developments first appeared yesterday on LiveSide.net, a blog and news service for Windows Live developers. However, the information that appears in this story was fully sourced through Microsoft.]