Microsoft this week took the wraps off the next version of Office, code-named Office 10, which takes baby steps toward the company's .NET "software as a service" strategy.

Beta 1 of Office 10 was sent to a group of beta testers the first week of August.

Final release of the productivity suite upgrade, which was first unveiled last month at a gathering of press and financial analysts, is expected by the end of June 2001, said Lisa Gurry, a Microsoft Office product manager, in Redmond, Wash.

A key feature will be increased support for XML. Gurry said the next versions of Excel and Access will support XML as a native file format, a significant improvement over the "pretty limited" support the current version, Office 2000, offers.

Office 10 also will introduce XML-based "smart tags," which let users click on a word in a document to get information on that subject from the Web or perform a function such as sending an e-mail or scheduling a conference, Gurry said.

On the services front, Office 10 integrates two Microsoft Web-based offerings: Hotmail e-mail service and MSN Instant Messenger.

Office 10 will include Microsoft's first significant efforts in speech recognition, with technology that will allow users to create and edit documents with dictation or voice command.

Gurry said collaboration features will be enhanced in Office 10, thanks to a tool that lets administrators and users build a Web-based Team Workspace, allowing team members to create contact and task lists, calendars, announcements, libraries for storing documents, and surveys.