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Microsoft cooking up more features for Hotmail

Will turn up the heat on online rivals with changes to the Web-based e-mail, plus other plans for MSN.

REDMOND, Wash.--Microsoft has demonstrated a more powerful version of its Hotmail Web-based e-mail program that is in the testing stages.

The software maker on Thursday showed a version of Hotmail that works a lot more like desktop e-mail programs such as Outlook or Outlook Express, offering options such as a preview of incoming e-mails, antiphishing features and the ability to block or unblock specific senders.

The demo came during a presentation by Senior Vice President Yusuf Mehdi at Microsoft's Financial Analysts Meeting here. Microsoft's move comes amid a renewed battle over Web-based e-mail, which has Google, Yahoo and others competing to offer more storage and other features in an attempt to win consumers to their e-mail service.

The antiphishing feature parallels work Microsoft is doing with the next version of Internet Explorer. If a suspicious e-mail arrives, the test version of Hotmail does not display the message. Instead, it warns the user that the e-mail appears to be potentially fraudulent and asks them if they want to block or allow that message and any other e-mails from that sender.

Microsoft also showed potential new features for its MSN Messenger instant-messaging service. These include a shared file folder that is available to buddies and an indicator that shows the virus condition of another user's PC, provided that buddy is using Microsoft's OneCare subscription antivirus service.

In search, the company is focused on trying to move from search queries that return links to a search results page that can offer not only links, but also specific answers to questions, Mehdi said.

The new features are all part of Microsoft's efforts to catch up to Google and Yahoo and move ahead in other areas.

"I wouldn't say everything is rosy," Mehdi said. "We are still behind on some things."

Mehdi pointed to a narrowing gap even in those areas, however. He said that the company's research shows MSN Search is narrowing the gap between the quality of its search results and those of search king Google.

Microsoft also showed off a new feature in its MSN Toolbar that will allow developers to add "widgets," small plug-in programs that add features such as weather forecasts or other data snippets. Yahoo recently acquired Konfabulator, a small software program that offers its own version of Widgets that offer similar information in a slightly different way.