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updated 8/31/2005 10:43:08 PM ET 2005-09-01T02:43:08

The state of Massachusetts has laid out a plan to switch all its workers away from Microsoft's Word, Excel and other desktop software applications, delivering what would be one of the most significant setbacks to the software company's battle against open source software in its home market.

The state said on Wednesday that all electronic documents "created and saved" by state employees would have to be based on open formats, with the switch to start at the beginning of 2007.

Documents created using Microsoft's Office software are produced in formats that are controlled by the Microsoft, making them inelligible. (MSNBC is a Microsoft - NBC joint venture.)

In a paper laying out its future technology strategy on Wednesday, the state also specified only two document types that could be used in the future — OpenDocument, which is used in open source applications like Open Office, and PDF, a widely used standard for electronic documents.

The switch to open formats like these was needed to ensure that the state could guarantee that citizens could open and read electronic documents in the future, according to the state —something that was not possible using closed formats.

The proposal, which is open for comment until the end of next week before it takes effect, would represent a big boost for open source software like Open Office, which is created by volunteer programmers and made available free of charge.

Like Linux, an open source operating system that competes with Microsoft's Windows, OpenOffice is widely used in some emerging countries, though it has very limited use in the US, said Sam Hiser, an open source consultant and author.

The decision by one of the most populous states in the country could influence others which have yet to weigh the issue, he added.

The Office suite of software, which includes Word, Excel, PowerPoint and Outlook, produces roughly 40 per cent of Microsoft's revenues and earnings.

Copyright The Financial Times Ltd. All rights reserved.

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