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I'd personally use folders over labels any time. more sense, more organized and you can still tag them.

 

I never got the more sense/organized argument. With Gmail, you label a conversation and the whole thread gets labeled, plus it's still available in sent mail. clicking on the thread from anywhere shows you the whole thread in its entirety. In Outlook, moving a thread to a folder only moves received mail, while sent mail from the same thread stays in the sent folder. It also doesn't show you the entire thread with no obvious pattern to exactly what it shows/does not show (afaict it only shows your own emails if somebody has replied to it, but hides it if there's been no reply) This breaks apart any logical link between mail that you send and receive. You also can't put the same item into multiple folders so if you categorize mail that you sent yourself, you no longer have a complete compilation of everything you sent. I didn't discover tagging functionality while I was using Outlook but I'll check that next time I have to use it again. I suspect even tagging won't help with the messed up categorization of sent mail though. On the other hand, you can replicate folder functionality fairly trivially with labels (just don't give things more than 1 label). So I can't think of a single use case where folders are superior to labels - besides the IMAP incompatibility which can be solved by improving IMAP instead of restricting all mail services to the same organization model that was devised at the very beginning.

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