Are they? What have the done recently that made Hangouts better?

The first step was disentangling it from G+.

I hope the next step is a sane API to let third-party clients integrate with it. It does not have to be XMPP, as long as it's something clear and well-supported.

They treat Hangouts like Yahoo would. Great product that they completely hosed by not caring about the userbase.

I wouldn't thrust Google for a second. They are not afraid to close down services with a short notice - so unless I can run my own "Hangouts" backbone it means nothing to me.

Sorry, not sure how much I can say in public. (There's lots of stuff that's public, but I can't just do a knowledge dump, because it's not clearly separated in my mind.)

you know, i stopped using hangouts not long ago. my mobile internet is sometimes really flaky and about 3 month ago messages didn't show up anymore after sending them. just nothing in the history for hours.

eventually (up to 8 hours later) they did show up, mostly at the correct time as well, but that wasnt good enough for me.