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The new file formats will allow Office to be more open to other developers and applications, and will meet the demands of users that require XML to meet regulatory requirements, said Gartner.
Michael Silver, vice-president and research director at the analyst firm, said the XML format would also enable Microsoft to compress documents more effectively, and add additional features more easily.
Users will also be able to strip out meta data and share data with other applications more seamlessly, said Silver.
Silver said, "In the past, the open source community has faulted Microsoft for controlling Office users' data with proprietary formats." He added that it would be possible for Office alternatives, such as Openoffice, to replicate Microsoft's file format more faithfully.
Steven Sinofsky, Microsoft senior vice-president for Office, said, "The new formats improve file and data management, data recovery and interoperability with line-of-business systems beyond what is possible with Office 2003 binary files.
"And any program that supports XML - it does not have to be part of Office or even from Microsoft - can access and work with data in the new file format."