On July 31^st, Microsoft unveiled its new cloud-based email service, Outlook.com, complete with a simple and clean UI and featuring integration with its own SkyDrive as well as with outside social sites such as Facebook and Twitter. Subscribers to its existing Hotmail service will over time be transitioned over to Outlook.com (a potential subscriber pipeline of more than 300 million individuals). Rather than revamping Hotmail, Microsoft has thus chosen to introduce a new email service from the ground up.

Tactically this makes sense: with Outlook.com, Microsoft avoids fighting existing consumer perceptions about Hotmail as well offers a product that can be positioned more squarely as an alternative to the incumbent leader Gmail. And as an addition to Bing, Outlook.com does seem to strengthen Microsoft’s competitive position vis a vis Google. However, does this introduction bring Microsoft closer to a cultural inflection point that requires it to choose between having an enterprise DNA vs. a consumer DNA? Also what does this mean in the context of social networking? If the current school-going and twenty-something generation ends up moving away from email and towards mobile social networks, Outlook.com may not end up as the kind of difference maker that Microsoft hopes it will become. Microsoft hasn’t unveiled a consumer social network yet, but if it does do so at some point (maybe a Yammer for consumers), then that will make things truly interesting for the enterprise software giant.