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We can now synchronize Outlook & Android without a 3rd party app or Exchange Server!
Hallelujah! For Android version 2.2 or newer, we no longer need 3rd party software or an Exchange Server to synchronize contacts and/or calendar items with Microsoft Outlook or Windows Live Mail (which I'll collectively refer to here as "Outlook").
Hotmail, MSN Mail, & Microsoft Live Mail (which collectively I'll refer to as "Hotmail") now enable synchronization between Outlook and Android's standard, built-in apps for contacts (a.k.a. "people"), calendar, and email through Android's built-in ActiveSync functionality. If you're not familiar with Hotmail, it's Microsoft's free webmail service, which is similar to Gmail or Yahoo Mail except that Hotmail contacts & calendars integrate & synchronize nicely with Outlook. You simply need to:
1) Add a free Hotmail account to Outlook or add it to Windows Live Mail. (The Hotmail account will appear on the left sidebar of Outlook below your current email accounts.)
2) Add that Hotmail account to the standard, built-in Android ActiveSync/email app.
More details follow...
You do not need to use Hotmail for email. You can still use Gmail (or whatever email service you prefer) as your primary email account on Outlook and on your Android device. You can choose whether or not to sync and/or view Hotmail as an additional email account, or as your primary email account, or not at all. (See below.)
All of your Outlook/Hotmail contacts will appear in a "contacts" folder on the left sidebar of Outlook, and will automatically appear inside the standard built-in Android app for contacts, along with any Gmail contacts, if you like. But at any time, you can simply change the ActiveSync settings on your Android device for each Hotmail and Gmail account to choose whether you want to sync the contacts in each of those accounts. (To do so, open the Android Contacts app, press the settings button, select "Accounts", and then tap each account to toggle sync on/off.) You can use your Hotmail-based contacts to make phone calls, send emails (from whichever email account you choose), get turn-by-turn directions, etc, just like you would with a Gmail-based "Google Contact".
All of your Outlook/Hotmail calendar items will appear in a calendar on the left sidebar of Outlook and will automatically appear inside the standard built-in Android calendar app along with any Gmail calendar items, if you like. (The items will be color-coded by account.) But at any time, you can simply change the ActiveSync settings on your Android device for each Hotmail and Gmail account to choose whether you want to sync and/or view the calendar items in each of those accounts. (To do so, open the Android calendar app, press the settings button, select "More", then "Calendars", and then tap each account to cycle through the option of synced/visible, synced/not-visible, or not-synced/not-visible.)
All of your Outlook/Hotmail email items will appear in folders (inbox, draft, sent, etc.) on the left sidebar of Outlook, and automatically appear inside the standard built-in Android "Email" app along with any Gmail email items, in a "merged" inbox if you like. (The emails will be color-coded by account.) Or you can choose to view the inbox for each account separately. (To do so, open the Android Email app, press the settings button, then select "Accounts" and make your selection of which inbox to view.) Or at any time, you can simply change the ActiveSync settings on your Android device for each Hotmail and Gmail account to choose whether you want to even sync the email items in each of those accounts. (From the home screen, press the settings button, select "Settings", then "Accounts & sync", and make your selections for each account.)
So for example: On your Android devices you could choose to sync both your Hotmail email and Gmail IMAP email. You could choose make your Gmail account your default inbox (but you can also easily check your Hotmail inbox anytime you like, and you can send mail from either account). And you could choose to view and sync the contacts and calendar for a Hotmail account (but not to sync contacts and calendar with Gmail). Then your email, contacts, and calendar items would be perfectly syncrhonized between all of your Outlook-PCs and all of your Android devices. (This example is how I synchronize my desktop PC, laptop PC, and Android phone.)
Synchronizatio is done over any Internet connection (cellular-data, WiFi, or wired).
The synchronization can be set up to syncrhonize automatically (push new stuff), manually, or on a timed basis (like once per day or once per hour).
Your contacts and calendar will also be available through Hotmail's (password-protected) web interface, from any device with web browsing capability, just like Gmail or Yahoo Mail.
If you have multiple PCs running Outlook, your contacts, calendar, and Hotmail can be synchronized across all of your PCs (as well as your Android devices) through Hotmail.
If you use this method to synchronize your contacts, your contacts will appear on your phone in your contacts folder like normal, but if you open a contact to edit it, you will notice that it is designated as a "Corporate Contact" (which is a misnomer) rather than a "Google Contact" and those contacts will be out of reach from very scary Google. (But of course, then Microsoft will have access to them... which you may or may not find as scary.)
No third party software app is needed on your phone or your PC.
Depending on your version of Outlook, you may need to install an Outlook add-in called Outlook Connector (which is a free download from Microsoft that enables Outlook to syncrhonize with Hotmail).
You must keep your Outlook contacts and calendar events in the default contacts and calendar folders of your Hotmail account on Outlook.
Your Hotmail contact, calendar, & email items will not be synchronized with Gmail (which is arguably a good thing if you don't trust Google with your contact information).
Your phone's built-in voice dialer will work with the Hotmail contacts, but "Google Voice Search" will not recognize those contacts (unless you also keep those contacts on the Gmail servers). That's because "Google Voice Search" searches through the contacts on the Gmail servers, not the contacts on your phone. If you want to use Google Voice Search on your contacts, you could occassionally export your Outlook/Hotmail contacts to Gmail contacts (but not necessarily sync them with your Android device).
Although Outlook supports multiple contacts folders and subfolders for each email account, Hotmail only supports a single contact folder. If you want to maintain and synchronize multiple separate contacts folders on Outlook & on your Android devices, then you must create multiple Hotmail accounts and add them to Outlook and the Email app on your Android devices.
Although Outlook and Hotmail support multiple calendars, only the default calendar will be syncrhonized with Android. If you want to maintain multiple calendars on Outlook, then you must create multiple Hotmail accounts and add them to Outlook and the Email app on your Android devices.
Each field in Hotmail (like Name, Company Name, Street Address, Notes, etc.) has a maximum number characters that can be synchronized with the Hotmail servers. The specifc limits for each field are at this link but to generally summarize it seems that: most name fields are limited to 40 characters, street address fields are limited to 256 characters, company names and titles are limited to 120 characters, and the notes field is limited to 1024 characters. You can have more characters than that in the Outlook contact on your PC, but the data will be truncated on Hotmail the server and on the Android device, so you should probably try to stay within those limits. If, on Outlook, you try to copy or create a Hotmail contact that exceeds the maximum character limit, you will be warned and asked to confirm that you are willing to truncate the data on the Hotmail server. When you create a Hotmail contact from your phone, your phone won't let you type more than the maximum number of characters for a given field.
To migrate from Gmail-based contacts to Hotmail-based calendar & contact from Outlook:
1) Make sure that all of your contacts (from your phone & Gmail) are in an Outlook Contact folder on your PC. (You may wish to back them up for safety.)
2) Delete all of your Gmail contacts from your Gmail account and your phone (if you don't want duplicates) or change the ActiveSync settings to stop synchronizing contacts with Gmail.
3) Add a Hotmail account to Outlook.
4) Copy & paste the contacts from your Outlook contacts folder into to your Hotmail contacts folder, or use the free Windows Live Contact Importer from Microsoft*.
5) Add that same Hotmail account to the Email app on your Android device and set up your synchronization preferences.
* Note that Hotmail only allows 1000 contacts to be imported at one time. If you have more than 1000 contacts, you'll have to copy them over in multiple tries.
To move your calendar from your Outlook Personal folders calendar to your Hotmail-based calendar:
1) Export your calendar as a PST file.
2) Then go to your Hotmail calendar and import that PST file into your Hotmail calendar.
From that point on, stop using contacts and calendar in your "Outlook Data File" on Outlook, and start using the "contacts" and "calendar" under your Hotmail account (which you'll find on the left sidebar of Outlook). Your Outlook/Hotmail contacts & calendar will be synchronized between your Outlook-PCs and your Android devices. You may even want to collapse your "Outlook Data File" so that you don't have to look at it.
When creating contacts or calendar events on your Android device, be sure to create them under your Hotmail account (which will appear as an option when you create a new item).
At last... a good, free, synchronization option for Outlook! Goodbye Gmail Contacts. Hello Outlook/Hotmail.