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I guess it depends on how many emails you receive per day. Works fine for me, but I'm not sure once you're over 100 per day...
For most people, it works well as it is. If it ain't broke, don't fix it.
For most people, I think it's dealing with the spam that makes it feel broken.
Using Gmail, I could count on one hand the number of spam emails I've received in the last few years.
Mine works just fine. :P
I've always been skeptical of how big this problem really is. People who need more power/flex are probably the minority.
Because we want it to do much more, and it can only do the limited things it was designed to do 30+ years ago.
I disagree wholeheartedly. Email can do much, much more than its original incarnations. Let's take a look at what I can do with email now:

1. I can send invites that automagically add an event to attendees' calendars. Not only that, but I can even set it up so that it reminds them about it an arbitrary time of my choosing before the event's about to start.

2. I can forward contact information around that will automagically put that contact info into the recipients address book.

3. I can create rich, HTML-based emails that now look spectacular instead of just a plain glob of text.

4. I can parse emails and have them file themselves into categories, along with assigning themselves deadlines for response/action entirely automatically.

5. I can now allocate a public folder of email that I can assign some alias to, such as "support@mydomain.com" and have that folder accessible by an entire team of people.

And while I'm sure email could improve, I'm confused as to what things email doesn't do that you want it to do. So, rather than a pithy reply about how email hasn't changed in 30 years (which is simply untrue), why don't you elaborate with what it is you'd actually like to see email provide?

I feel it should be more than it is.

A great deal of what comes into my mailbox are action items: Fix this. Attend this meeting. Do this by end of the week. Tell me what you think. Don't forget your appointment at the dentist.

What should happen is that 'mail' decides 'fix this' goes to a service desk, 'attend this' goes to a calendar, and so on.

It is not. It's all manual with a veneer of pretty mouse clicks and it sucks.

The fact that I'd really like my car to be able to travel at the speed of light doesn't make it broken when it can't.

My car also doesn't fix me dinner, which would be really cool, but the lack of satisfaction of my own personal wishlist doesn't mean the objectives that are set out to be achieved by cars have not been sufficiently met for most people.

Bad analogies. Your car would fall apart long before it cranked up to a speed even approaching speed of light. It's not designed to do that - it's just a hunk of iron and plastic.

Mail is 1s and 0s.

There is no reason why we can't have intelligence acting on those bits: doing rote tasks is what computers are good at.

If you're happy with mail as-is, great.

But consider that it could be better.

I've failed to prevent people from getting caught up on the less important parts. Okay, how about this:

MS Excel is a product that accomplishes a certain set of objectives for a great number of people. Suppose the title of this thread were "Why do people say Excel is broken?", to which someone would respond that they can't clickity here and there and have Excel take complete care of their investment portfolio. Whether or not this is technologically feasible, saying that Excel is broken just because it fails (out of the box, at least to my knowledge) to support a particular feature in some particular way that someone may want is silly.

Of course anything can be better, but let's be realistic about what's broken and what isn't.

Of course anything can be better, but let's be realistic about what's broken and what isn't.

Fine.

But I'm going to hold on to my fantasy of wanting an app that does in bits what a secretary used to do in real life.

I don't think it's broken. I just personally feel the information should be displayed better. Email just needs a better UI/UX. For example, Microsoft did a great job with the outlook interface, it's still the same old email and I can pretty much do everything I can do with Gmail with it but I signed up because the UI looks much better. I don't feel so "bombarded" when I log in
I don't think email is broken. Personally a tool I really believe could somewhat replace email was Google Wave. It was a fantastic tool...just Google has not been able to market it. What I believe instead is that e-mail could be used as a transport for additional structured information. Today it happens with vCard, or ics but it could be much more I believe.
As a way to send information is email unsurpassed, however from the receivers perspective the signal to noise ratio quickly favors noise.. and by that time it is difficult to adjust.

The real failing is that the interaction paradigms for tuning the noise to signal ratio are extremely manual and difficult to verify if it has been adjusted or filtered properly once set.

I could be as easy as choosing who I care about, what I care about, and when I care about it.. but instead we are forced to set up smart filters, formulas etc and assume that we wont miss anything important.

Also, 5 clicks to unsubscribe is another kind of fail altogether that makes pruning the inbox time consuming and hardly worth the effort when compared to just letting the spam, coupon pepper your real communications. Wouldn't it be nice if email automatically park those offers on a side bar? ..along with the rest of the no-replies? Keeping the conversations and action items front and center.