Office 95 is "just too old and we have come a long way," said a company spokeswoman in the United Kingdom. "We are recommending that users jump straight to XP."
Analysts say the policy will irk some people and dent the budgets of companies that are still using older versions of Microsoft's Office software.
The full version of Office XP, set to launch at the end of May, will cost around twice as much as the upgraded version. The estimated retail upgrade price will be $239, and the full version will cost $479. The upgraded version can be used to revamp older Office 97 and Office 2000 installations.
Dan Kusnetzky, vice president for system software research with analyst firm IDC, said that a considerable number of companies still rely on Office 95.
"A lot of organizations are still running 95 because that is what they wanted at the time," he said. "A lot of businesspeople operate with the attitude that if it is good enough, then it's good enough."
Microsoft Office is the most popular business productivity software as well as Microsoft's cash cow, accounting for 46 percent of the company's revenue.
Boris Suchantke, manager of Com.eins Computer, a German company that buys software from liquidation procedures and resells upgraded versions, is unhappy about Microsoft's policy not to allow upgrades from older versions of the software. "I'm very surprised," he said. "They have been allowing it for years and have decided to stop overnight."
There have, however, been three upgrades since Office 95, and Kusnetzky believes it is not surprising that Microsoft now wants to stop providing upgrades for this version. He said people will inevitably, from time to time, be faced with the need to buy software from scratch.
"It would seem plausible that they would decide they weren't going to make an upgrade (and) say that they can't supply the engineering. I'm not sure that other vendors would do differently," Kusnetzky said.
Staff writer Will Knight reported from London.