Hotmail turned off Outlook access. Defeaturing software AFTER I've paid for it should be illegal

I was appalled when I returned from a trip this weekend and found out the hard way that Microsoft had turned off access to MSN Hotmail via Outlook. When I tried to sync my Hotmail in Outlook, I got an error encouraging me to upgrade (i.e. pay MSN a yearly fee).

Why would Microsoft turn off Outlook/OE access to free Hotmail users?
It costs money for Hotmail to support Outlook and Outlook Express users. In addition to large development costs (there are different code paths for web access and POP access), Outlook/OE users make a significantly higher number of connections to the servers than web users do. This translates into real dollars.

After the bubble burst, most companies learned that "Free" isn't a great business model. Indeed, when I was working on Windows XP there was discussion about turning off Outlook Express access to Hotmail (Outlook Express is the free mail client that comes with Windows). At that time, upper management refused to allow this because it would cause a bad user experience and they needed a "free" email solution in the box for new Windows users (a perceived requirement). There are literally tens of millions of OE users and MSFT didn't have a good way to charge them for Hotmail access.

What has changed since then?
A few things:
1) Hotmail now offers a premium service. There is a way to charge users.
2) There has been an explosion of other free email services.
3) In my opinion, Hotmail has gone from being the gem of Microsoft's internet strategy to being a thorn in its side that is only a cost center (and quickly becoming an unnecessary one at that).

So what's my beef? Is this legal?
I paid for Outlook. Sure, I got the student version, but I still paid for it. As part of the deal, I understood that I got Hotmail access via POP. Microsoft has taken my money and then DEFEATURED the software that I purchased from them. I'm irate. This should absolutely be illegal (if it isn't already). In fact, I think I'm going to file with the Better Business Bureau and I've already filled out the MSN Hotmail feedback form. You should do the same.

I'm further annoyed that this is just a bookkeeping problem for Microsoft: the Office P/L should pay the Hotmail P/L for my access if that's the problem. This is a horrible example of a giant company taking advantage of consumers.

To be honest, the user experience is awful. If they wanted to scale back, Microsoft could have stopped allowing NEW users to move to OE + Hotmail or Outlook + Hotmail. With this implementation, they are alienating faithful customers (and former employees!) and further sullying their already-dirty image.

GMail: my new lead dog.
I have a GMail account that I was using mostly for fun (to see how it worked, etc). However, GMail has full POP access. I was a faithful Hotmail user until yesterday. From now on, it will become my SPAM account and GMail is my new lead dog. If we assume, though, that GMail will eventually support itself via the relevant-ad model (as Google does), I wonder if it will continue to accept Outlook access in the long term (since ads won't show in the Outlook user interface and so the revenue model disappears).

Implications for Hotmail?
At this point, I can only assume that Hotmail is dying a slow death. I can't imagine that anyone would pony up a yearly fee to continue to get what she used to get for free (especially considering other options still exist--see below). I have no idea how many people pay for Hotmail Premium, but I can't imagine that it's very many. Remember that the Hotmail acquisition was primarily a way to bootstrap the now-dying Passport service.

Anything else you want to say?
Yah, a disclaimer: I don't work at Microsoft any more and even when I did, I was not privy to executive discussions. My statements here are purely based on my own reasoning and information that is publicly available. :-)

joel