Google and Microsoft are making moves to reorganize the way we use email. It comes at a stage when we’re using social networks more and more in favor of the old email inbox. Why then all the fuss and investment? And, what does it mean for us?

The tech titans have unveiled three big changes this week. The first arrived Monday, a major revamp of Hotmail, which Microsoft details step-by-step in this video explanation here. At its most basic level, Hotmail will getting some Gmail-like features: more space and better organized email conversations. Plus, as this is a Microsoft product, it will have Word and PowerPoint editing built in. Nice move, but, we wonder, will the typical Hotmail user, not a sophisticated bunch, appreciate these professional bells and whistles?

Google comes next with new Gmail features that will put greater email application functionality in the hands of the users, with help from third-party developers. Through the Google API and App Marketplace, Google is bringing new Gmail “Contextual Gadgets” created by fellow emailers right in our inboxes. Call it a “for us, by us” approach to email functionality evolution.

But what are these “Contextual Gadgets,” and why do we want them in our email? Well, to put simply, they will give email users the power to perform tasks straight from the inbox. For example, respond to a friend’s comment on Facebook, view and comment on a YouTube video, and view news and descriptions of companies and products related to whatever the email is about, to name a few. Microsoft’s Hotmail is going to have these functions too (although they haven’t mentioned, surprise, surprise, an API app creation platform for developers or users).

The practical reason for all this added functionality, says Microsoft, is that one in five emails is from a social network letting you know about a friend’s status update. Yes, one in five! Essentially, the thinking goes, why waste precious time going to your social network to comment on the update when you can just do it directly from your email? Of course, this is just a simplified example. All the changes are like doping up email, creating a kind of Facebook update on crack.

We can expect the competition between Google and Microsoft to flare up for more users. Google is already partnering with Xobni to integrate its contextual gadgets into Microsoft’s Outlook (without actually asking them for permission, may we add). Microsoft’s response was simply that it won’t “introduce anything new” for Outlook and “it’s clear that Google recognizes Outlook is the leading email experience.”

Those don’t exactly sound like fighting words, but we’re happy to see the two motivated enough to make their email offerings more socially intuitive.

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