MSN coupling
Hotmail's used a lot, not for email, but for the MSN service. Yes, I can have a Passport w/o msn/hotmail addresses, but its a hassle for the computer-illiterate (I know of a friend that still has that "Unverified email address" stuck on her nickname), and they are not interested in learning how to do this. They want quick, fool.proof messaging. Opening an MSN acct. does exactly this.
Of course, spam isn't the only concern. For years, Hotmail stuck to the 2Mb (TWO MEGABYTE) space limit on the email service. Even when Yahoo upped the limit to 100 Mb, and Gmail came out, they *still* kept the crappy 2Mb limit.
When they finally upped the limit ... it was to 250 Mb. And *only* to US subscribers (telling non-US users to f*** off, basically). As a result, many users switched their hotmail addy info to a US address, which wasn't that hard; I wonder if M$ wonders why are there about a zillion users in Beverly Hills 90210 ;). I had briefly lived in the US and forgot to update my addy back to Mexico, so I got the benefit.
Still.... 250 is nothing near to what Gmail offered. Yahoo! upped! to! 1Gb! after Gmail. The first time Hotmail upped to 2Gb was only when it started the Beta version of Live Hotmail.
It seems like M$ doesn't care about its hotmail service.