As reported previously in WinInfo, the next version of Microsoft Office--currently operating under the codename "Office 10"--is not the first iteration of Office.NET ("Office Dot Net") but rather a familiar update to Office 2000 with no server-hosting requirement. Most surprisingly, however, was an admission by Microsoft this week at a financial analysts meeting that realizing the Office.NET vision may take a few more iterations of the Office suite. Previously, it was expected that Office 10 would be the last "traditional" release of Office and that future versions of the suite would be available solely online as software services to which users could subscribe. But the company now admits that it will be impossible to abandon its traditional market, and will likely continue to development desktop versions of the Office suite for the foreseeable future. The company publicly demonstrated Office 10 this week.

"People are going to be using Excel and using Word and using PowerPoint for a long, long time," said Microsoft group vice president Bob Muglia. "If nothing else, we have big customers who have very big compatibility requirements with that format." The idea of renting software rather than buying a shrink-wrapped copy is also going to cause headaches for customers until its more common. So Office 10 will still ship in traditional packaging while offering a smattering of .NET functionality. "The next version of the world's leading desktop productivity suite will be an exciting opportunity for our customers and partners as we move toward our Office.NET vision," said Steven Sinofsky, the senior vice president of Microsoft's Business Productivity Group. "The innovations we previewed will make it easy for our customers to include Web services in their everyday use of Office applications and work seamlessly with others."

But the Office 10 suite will still occupy hundreds of megabytes of local disk space and will not, itself, run over the Internet as Office.NET eventually will. Instead, Office 10 will be the first stepping-stone to this future. Office 10 will offer a number of ease-of-use enhancements, a simpler interface, and better decision-making tools. A .NET-like feature called "Smart Links" will automatically provide hyperlink-like connections between related documents. And the new version of "Digital Dashboard" that the company rolled out at this summer's TechEd event will also be included in Office 10. A server-based add-on, code-named "Tahoe," will feature a Digital Dashboard "portal" for indexing, advanced searching, and other services.

Historically, Office has been responsible for up to half of the company's revenues. But slowing growth over the past year has reduced the financial benefits of Office dramatically. So Office has switched to a Windows development model, where two versions--a current version (Office 10) and a future version (Office.NET)--are developed simultaneously by two different teams. Office 10 will attempt to milk the traditional desktop cash cow for one more release, while Office.NET strives to provide a version of the suite that will run as services over the Web. Sinofsky and his group aren't too excited about the new Office group, called NetDocs. "Everybody wants to be the lead dog," Microsoft CEO Steve Ballmer told the Wall Street Journal. "But we need to lead on multiple fronts." The NetDocs group was formed in 1997 amid customer complaints that Office was getting too big and unwieldy. But the fruits of its labor probably won't see the light of day for a few more years. "\[NetDocs\] is not a product," Muglia said about the semi-secret project. "There's nothing for somebody to buy here. We're public about things we have a reason to be public about."

Microsoft has already demonstrated one bit of NetDocs technology, the "universal canvas" that NetDocs product manager Jonathan Perera unveiled last month at the company's Internet strategy day. The universal canvas works like a Web browser, but allows the user to perform any operation, including word processing, web browsing, email, and document management. Perera showed how a list of numbers on a remote Web site could be calculated and charted as if they were in Excel, all without launching any other applications. If the company can pull it off, universal canvas will likely be at the center of a future version of Windows, not just Office. "We see this technology as being a very important thing as far as defining the new \[.NET\] user experience," Muglia said