Microsoft’s MSN is going to launch a new version of Hotmail codenamed Kahuna. Kahuna will have a new style of interface, automatic inbox refreshing and a preview pane that will enable Hotmail users to read and respond to e-mail without ever leaving their inbox.

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According to sources familiar with the upgrade, Kahuna is a limited beta that is not heavy on features as of yet. Its interface is known internally as “Wave 11″ and is designed to be lightweight and “clean” for better performance. Further integration with MSN Spaces and Messenger is said to be forthcoming.

Finally Microsoft realized they are lacking behind in a couple of key areas. personally, I really do not like the pop up box whenever have to clean up all the junk mails. X-(

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Recognizing that it is behind in several key areas, Microsoft has engineered the next wave of Hotmail, allegedly referred to as the “competitive wave,” in a methodical push to meet or exceed the competition.

Furthermore, some new features will be added in as an enhancement to the free email service such as natural drag and drop capabilities between folders; automatic inbox refreshing and real-time audible new mail notifications, etc.

Microsoft would not comment directly on Kahuna, but a spokesperson explained that, “The MSN Hotmail team is constantly exploring and internally testing new features as part of our ongoing investments in the service. Some initiatives will appear in future products and services.”