First, the name was changed to Windows Live Hotmail. Then the Outlook-ish interface, similar to the one from Yahoo Mail Beta, is only an option. By default, Windows Live Hotmail has a classic interface that doesn't uses AJAX. "The full version has drag-and-drop functionality, right-click menus, and a reading pane to help you view e-mail quickly. The classic version uses check boxes and doesn't have a reading pane."
CNet reports that the change was necessary because "the program was too slow to load, too different and, well, just not like the old Hotmail it was intended to replace. It was a painful realization for the more than 100 managers and developers on the project. In banking on a snazzy Web 2.0 application to try to catch up to rivals Yahoo and Google, Microsoft had dramatically overshot its audience."
The classic interface is closer to Gmail, although it still uses folders, doesn't have threads and there are a lot of annoying usability issues like the weird position of the "Send" button.
Another bad choice is the "Today" panel that greets you when you open Windows Live Mail. Instead of seeing your inbox, you get the chance to read popular news and articles from MSN. CNet offers a possible explanation for this:
"If you open Windows Live Hotmail and notice that your first message doesn't automatically open in the preview pane, you can blame Match.com. Initially, Microsoft figured people would like to see their first message. But, it turns out that many people don't necessarily want their co-workers or anyone else to see that Victoria's Secret special offer or the update from their online-dating service."
Microsoft continues to show little respect for its users by not adding support for POP3 or IMAP. Instead, they want to push Windows Live Mail Desktop that displays text ads in a Gmail fashion and an "Outlook connector software that will enable anyone with a copy of Outlook 2003 or Outlook 2007 to use the software to access Windows Live Hotmail messages and contacts".