Microsoft Office introduced several new file formats which can’t be read by older versions of the various Office products. I’m not sure why Microsoft decided to change the file formats but it is really a hassle for me. I’m running Office 2007 on my system while my girlfriend is still running an older version of Microsoft Office.
It happened twice already that she worked on my computer and saved a Microsoft Word format in the new format (.docx) and was not able to read the file on her computer. She does not have Internet access there which means that it was really problematic to get the right format on her computer.
The Microsoft Office Compatibility Pack which has a size of nearly 28 megabytes is adding support for the new Office formats to computers that run previous versions of Microsoft Office. Just download and install the Compatibility Pack to make sure that you can read those file formats.
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AFAIK they changed the format because the old one was more-or-less just a memory dump of the document and each version would contain a copy of each of the previous version’s formats (so version 4 would have 4 copies: v4, v3, v2, v1). The new version is XML based from what I’ve read, but as I use the OpenOffice.org suite (http://www.openoffice.org/) (rather than the Microsoft Office suite), I haven’t looked.