Microsoft's decision to allow its Office software to handle the increasingly popular ODF (OpenDocument Format) was a belated acknowledgement that the company could lose customers if it didn't, analysts said this week.

The software giant announced it would help three companies develop add-ins for its Office software suite that will create drop-down menus in Word, Excel and PowerPoint to open and save items in ODF.

The code for the add-ins will be released under the BSD (Berkeley Software Distribution) licence on, an open-source development website.

Microsoft won't say how much it is investing in the project. The three companies developing and testing the translators are Clever Age of France, Aztec of India and Dialogika in Germany.

"Microsoft has been kind of forced to do that, kicking and screaming all the way, but it really didn't have any choice," said Laurent Lachal, senior analyst in charge of open-source research at Ovum. "The move was bound to happen."

ODF is used in OpenOffice, a free, open-source application, as well as StarOffice, the commercial version of OpenOffice.

While adoption of OpenOffice remains relatively low, governments are showing increased interest in ODF. Both Belgium and Denmark have scheduled trials using ODF, and the state of Massachusetts intends to use ODF by 1 January.

Microsoft acknowledged that requests from the government sector played a part in its decision.

The issue over file formats had "clouded" the decision-making of people determining how they would get the most value from their software, said Tom Robertson, Microsoft's general manager of standards and interoperability.

Microsoft has elected to post the source code for the translators on A first version of an OpenDocument translator for Word 2007 was posted there on Wednesday.

The decision brings a public-relations benefit for Microsoft, which has sought to reverse bruises incurred five years ago when CEO Steve Ballmer labelled the open-source Linux OS (operating system) "a cancer".

"That doesn't necessarily mean it is now backing open source or taking it as a strategy of its own to go into that direction with its products," said Diego Lo Giudice, principal consultant at Forrester Research. "It's under pressure. From the marketing perspective, it creates a little bit more positive feeling about Microsoft."

Microsoft has taken pains to stress the superiority of Open XML (Extensible Markup Language), its own specification under consideration to become a document standard, over ODF. Open XML will be the default file format for its upcoming Office 2007 release.

Jean Paoli, Microsoft's general manager of interoperability and XML architecture, said in an interview that Open XML is backed by 4,000 pages of documentation of features, while ODF has around 700 pages.

"We really believe that Open XML is the full-featured format," Paoli said.

But Lachal disputed the comparison, saying ODF is a developed technology. The two formats can't be compared by the length of their documentation.

"That's nonsense," he said.

Older versions of Office will get translators as well as upgrades to Open XML, Microsoft said. By December, a final version of the Word translator will be released, with ones for Excel and PowerPoint available in 2007.