New Office locks down documents

Digital rights management tools in Microsoft's new Office package may give the software maker a new avenue for selling server software and locking out competitors.

As digital media publishers scramble to devise a foolproof method of copy protection, Microsoft is ready to push digital rights management into a whole new arena--your desktop.

Office 2003, the upcoming update of the company's market-dominating productivity package, for the first time will include tools for restricting access to documents created with the software. Office workers can specify who can read or alter a spreadsheet, block it from copying or printing, and set an expiration date.

The technology is one of the first major steps in Microsoft's plan to popularize Windows Rights Management Services, a wide-ranging plan to make restricted access to information a standard part of business processes.

Analysts say it represents a badly needed new avenue for boosting sales of Microsoft's server software and an opportunity to lock out competitors, including older versions of Office. It also gives businesses that skipped on the last round or two of Office upgrades a new reason to bite this time.

"If Office 2003 was just another incremental upgrade, they'd have a hard time getting businesses interested," said Michael Gartenberg, an analyst for Jupiter Research. "For most people, the pinnacle of functionality in Office applications came in 1995. But there are more things that can be done using Office as a platform for delivering new services."

The new rights management tools splinter to some extent the long-standing interoperability of Office formats. Until now, PC users have been able to count on opening and manipulating any document saved in Microsoft Word's ".doc" format or Excel's ".xls" in any compatible program, including older versions of Office and competing packages such as Sun Microsystems' StarOffice and the open-source OpenOffice. But rights-protected documents created in Office 2003 can be manipulated only in Office 2003.

"There's certainly a lock-in factor," said Matt Rosoff, an analyst with Directions on Microsoft. "Microsoft would love people to use Office and only Office. They made very sure that Office has these features that nobody else has."

Information Rights Management (IRM) tools will be included in the professional versions of all Office applications, including the Word processor and Excel spreadsheet programs.

To use IRM features, businesses will need a server running Microsoft's Windows Server 2003 operating system and Windows Rights Management Services software. The server software will record permission rules set by the document creator, such as other people authorized to view the document and expiration dates for any permissions. When another person receives that document, they briefly log in to the Windows Rights Management server--over the Internet or a corporate network--to validate the permissions.

Dan Leach, Microsoft's lead product manager for Office, said rights management features were built into the new Office based on ongoing discussions with customers.

"We asked people what types of things would you like to do that you can't do now, and what they said is they'd like to spread large amounts of information around to more of their people--but they have concerns that the wider they spread information, the more likely it is to become available to the wrong people," he said.

Gartenberg said there's a valid need for such services, especially as office workers become more mobile and more sensitive information is stored on PCs.

"If you're a senior executive and you're carrying around your five-year business plan, you probably want to have that information secured so only you can read it," he said.

Businesses can lock down such documents now with third-party tools such as encryption software, but embedded rights management tools in the document creation software are much easier and more likely to be used, Gartenberg said. "The harder you make security to use for the end user, the less people are going to use it," he said.

Directions on Microsoft's Rosoff said there's a valid business reason for encoding rights management into documents, as shown by Microsoft's travails with leaked software code and documents.

Pushing server sales
As with many Microsoft innovations, the new IRM tools also happen to benefit the software giant's sales in a complementary market--server software--where there's room for growth, as opposed to the fairly saturated market for desktop applications. Both IRM and expanded XML (Extensible Markup Language) functionality--the two biggest areas of innovation in Office 2003--tap into Microsoft's server software. IRM in particular requires Windows Server 2003, which businesses have been slow to adopt since Microsoft finally unveiled it earlier this year.

"When you dominate a market, you change that market," Rosoff said. "Office already has all the document management features people could possibly want. The only way to add value to Office is to make it part of this larger system that adds value."

Microsoft's Leach said Windows Server 2003 simply was the best avenue for delivering rights management functions. "To solve the problem our customers identified...it requires the ability to take advantage of some of the capabilities in Windows Server 2003," he said. "There are many companies that have already invested in Windows Server...and this is certainly going to be a differentiator for them."

Rosoff said Microsoft appears to be less concerned about competitors, however, than getting existing customers to upgrade. "I don't think they're extremely worried about the threat of OpenOffice," he said. "They're worried that documents management is a fairly mature technology that's pretty widely available, so they need to come up with a compelling way to do it."

There's also the potential for confusion in companies that don't upgrade every desktop to Office 2003 at the same time. Workers with Office 2003 will be able to produce documents colleagues with older versions can't use.

"The big question is whether they'll try to bring some backward compatibility," Jupiter's Gartenberg said. "If business users insist on a higher level of interoperability with their existing software, that could be a real challenge. It's very hard to go back and re-architect some of the security features for the older systems."

Leach said Microsoft will provide a free plug-in for its Internet Explorer Web browser that will let it display rights-protected Office documents.

"We recognize that people are going to want to take advantage of this that don't have Office 2003," he said. "This way, they can see the document in a browser window (and) they can print, copy or forward," as decided by the document creator.

Leach added that even for organizations that adopt Office 2003, rights management will still be the exception rather than the rule when creating documents.

"It's not something that you would set up as the default, so that every document I would create is rights management protected," he said. "It's important that you make a choice to apply rights management to a document for very specific reasons."

Rosoff said IRM should see fairly quick adoption--at least compared with complex XML-based functions to be tied into Office 2003--because it solves an immediate business problem and is relatively cheap and easy to implement.

"It's pretty clear with digital rights management what it is and what problems it's trying to solve," he said. "It's not going to be adopted en masse, but I think they'll have a good rollout department by department for people dealing with more sensitive documents."

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