Google updated its Hangouts app to consolidate your text and chat messages from the same sender into a single thread. Just in case you get confused about what kind of message your contact sent you, Google has color-coded the messages. You can also reply using either method and separate the messages as well. Google has also split your Hangouts and phone contacts list to make it easier to search through them. The company has also updated video call quality and the home screen widget.
Source: Google+