The update finally solves off the major complaint about Hangouts since it got its sms integration. From now on, it will combine your sms and Hangouts conversation. We also expected some UI changes, something we could surely expect after the iOS update but we're not there yet.
Having your text messages and hangouts in the same thread could have been a little confusing too. Previously the sms were tagged with the li'l "Via SMS" tag. But with the amalgamation of the two type of conversation, Google has now decided to make it easier to figure out which one is which. Your Sms messages will be coloured with a white background while your Hangouts messages will be coloured green. Also while sending a message you will be asked to select between Sms and Hangouts.
Other subtle changes to the app include a simpler contacts list that's now been divided in 2 parts: People you Hangout with and Phone contacts.
And lastly, Google has finally added a home screen widget for hangouts that's been missing ever since the service debuted.
The update is not live yet but you will see the staged roll out update by the end of this week.
Images courtesy of +Mike Dodd, who works for Hangouts with the Android team at Google.
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