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Microsoft's latest biennial remodel of Office is now in beta testing. We took it out for a spin. Result? Except for a major overhaul of Outlook, the upgrade looks much like today's model--on the surface.

But under the hood, the new version of the market-leading productivity suite--which is due to ship in mid-2003 and requires Windows XP or Win 2000--introduces changes that could eventually be significant for individuals and businesses alike.

The biggest innovation in Office 11 (the upgrade's code name) is enhanced support for XML (Extensible Markup Language, an open standard for data and formatting). In the short term, this will most benefit workers who currently have to transfer information from industrial-strength non-Office apps like Oracle and SAP databases to their Office documents manually, and vice versa. For example, with Office 11 you can link fields in an Excel spreadsheet to any database that uses the increasingly common XML interface.

A few years from now, even noncorporate types will find Office's XML support useful, as businesses of all kinds begin generating XML-based online forms, says Forrester analyst Frank Gillett. These forms will be convenient alternatives to today's cumbersome Web forms. You could, for example, download an XML-compliant Word or Excel credit card application, fill it out, and submit it either by clicking on a button included in the form or by using a browser (similar to the way that you upload photos to online albums).

Because the file would remain live, you could later correct something in the associated database--an address or phone number, perhaps--by simply changing and resubmitting the document. Try doing that on the Web today!

New Outlook

Office 11 users will quickly notice the renovated Outlook. The in-box and preview pane, instead of being stacked horizontally, are by default side-by-side, which enlarges the preview but squishes subject lines and other in-box data. I liked it. I also appreciated that, by default, Outlook no longer automatically downloads embedded graphics files from external Web sites--a welcome privacy feature.

You can assign colored flags to mark messages for subsequent follow-up (regrettably, however, the feature does not work when you use Outlook to read Microsoft's own Web-based MSN or Hotmail). You can save search parameters to a folder so that the search is performed on all incoming mail, and updated results will always be available in that folder. The new Outlook also allows you to preview incoming messages, even if the app is minimized, via small semitransparent windows that pop up; identify the sender, subject line, and some text; and then fade away like an all-text Cheshire cat.

The new suite's overall blue, beige, and mustard color palette seems inspired by the look of Mac OS X. Enhanced integration with SharePoint Team Services (Microsoft's online-collaboration service) makes it easier for several people to work on a single document at the same time without inadvertently overwriting one another's revisions.

Microsoft has not yet announced pricing for Office 11, but people who use Office primarily on their own for correspondence and spreadsheets probably won't find the new version a must-have upgrade: Forrester's Gillett says that XML won't really matter to the masses until at least 2004, and the Outlook changes aren't vital. But the technology that lies beneath them may eventually make Office 11 worth the investment for everyone.

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