Microsoft Quietly Pushes Office 10 Into Early Beta

Microsoft Corp., which will now have to fight a shored-up battle against Linux on both the desktop and server sides, is accelerating its efforts to integrate Office with the Internet.

The software giant's recently previewed next-generation Office suite, code-named Office 10, has already quietly moved into beta testing to a small number of corporate customers, Microsoft sources confirmed Monday.

The Office upgrade, which was demonstrated at the company's financial analyst summit at its headquarters in Redmond, Wash., last month, will offer deeper XML integration, the ability to save Word documents and other Office documents directly to MSN folders, and the ability to more easily retrieve data from Web services on the Internet and "Smart Tags."

Smart Tags will give users direct pop-up information from the Internet while working on a Word document, officials said. Forexample, a user who types in a person's name may see a pop-up box that provides that person's address and phone number from an Internet-based phone book.

The creation and backing of the GNOME Foundation by industry titans such as IBM Corp., Compaq Computer Corp., Sun Microsystems Inc., and Hewlett-Packard at LinuxWorld this week means Microsoft now has to worry about Linux gaining steam on the desktop, industry observers said.

While desktop adoption of the free Unix-like operating systemhas been slow to date, Linux has made major inroads in the server operating system market, particularly for Web hosting applications.

The GNOME Foundation aims to push broad adoption of GNOME on Linux and Unix desktops worldwide.

The creation of standard Linux APIs for desktop development on GNOME, which will be supported in Eazel Inc.'s forthcoming "Nautilus" Linux desktop GUI, as well as Sun's StarOffice office suite, is a direct threat to Microsoft Windows and Office, observers said.

Nautilus, which is being demonstrated for the first time Tuesday at LinuxWorld and will be available for download in September, will adhere to the GNOME 1.4 specification that will be endorsed by the GNOME Foundation, said a spokesman for Eazel, Mountain View, Calif.

Sun sources said the Linux APIs and applications that conform to GNOME will support Microsoft Office documents, a feature deemed necessary for the program's widespread adoption.

Microsoft sources, however, maintain that the company's massive installed base, combined with its development allies and its product support services, will protect Office from any Linux office suite or GUI.

Lisa Gurry, a product manager for Office, disputed claims made by the government that Microsoft's monopolistic behavior has thwarted competition in the Office market.

"[GNOME] is an example of how competitive the industry is -- it's a wide-open door," Gurry said. "What remains to be seen is whether they can be successful. They don't have the strong customer base we do. We have 120 million customers and 2.6 million developers creating solutions [for Office]."

Office's deep integration with Windows and development platforms will make it difficult for Linux desktop applications to compete, she said.