The most crucial and important part of Windows 8’s integration with Windows Live has been reformed today. Windows Live, the brand name of a suite of web based services (Hotmail, SkyDrive and Messenger) has been finally dissolved.

In the latest post on the official Windows 8 blog site, Microsoft’s Chris Jones writes about how Windows Live reimaged aka cloud services for Windows 8 and Windows Phone.

Windows Live services and apps were built on versions of Windows that were simply not designed to be connected to a cloud service for anything other than updates, and as a result, they felt “bolted on” to the experience. This created some amount of customer confusion, which is noted in several reviews and editorials. The names we used to describe our products added to that complexity: we used “Windows Live” to refer to software for your PC (Windows Live Essentials), a suite of web-based services (Hotmail, SkyDrive, and Messenger), your account relationship with Microsoft (Windows Live ID), and a host of other offers.

The first and noticeable change is that Windows Live ID will be known as Microsoft Account now. So when you use your Microsoft account to sign in to your Windows 8 PC, then your email, calendar, contacts, messages, and shared photo albums show up right in Metro style apps.

Windows Phone already comes with the similar set of cloud-powered apps and connected to your Microsoft account like Mail, People, Photos, Messaging and so forth.

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The idea of re-imagination of Windows Live in-context of Windows 8 came from the innovative features of Contracts and File Pickers allowing you to access SkyDrive data from within any Windows 8 Metro style app. And every Microsoft account gets a SkyDrive, the house of cloud storage for documents, photos and settings from your Windows 8 PC.

Here is the chart below breaks down software and services in the new world of Windows 8: