Perhaps the most talked-about technology at Microsoft's annual Windows Hardware Engineering Conference last week was a new file format, code-named Metro, that could move the company into the market for electronic paper. Its toughest competitor in that arena will be Adobe Systems Inc., which makes the popular Acrobat software and created the Portable Document Format standard for viewing, modifying, and printing files, regardless of the software a user runs.

Metro will be part of Microsoft's upcoming Longhorn operating system for PCs and servers, due in a public test version this summer, said chairman and chief software architect Bill Gates in a speech at the conference. A final version could arrive by Christmas 2006. "If you look at Longhorn as a whole, it's very broad, what we're doing," he said. "It's easy to say it's a next-generation platform."

That platform will include Metro, a combination file format, document viewer, and "page description language" that can print graphics-packed files with higher fidelity than Windows can today. It's reliant on technology called Avalon that will ship with Longhorn. Microsoft last week released a technical specification for Metro and plans to license the technology, based on XML, at no charge.

PC users are generating more advanced graphics with PowerPoint and other apps, and the trend will accelerate, says Microsoft group product manager Greg Sullivan. Today's Windows printing system dates from the mid-'90s, he says, which means printed documents lose fidelity and don't always match what's on screen.

	PC users are generating more advanced graphics, Sullivan says. Photo by Jeff Christensen/Reuters

Right now, Adobe Systems owns the market for E-paper; its free PDF reader for viewing Acrobat software files comes on nearly all PCs and Macs. Authors also can lock down PDF files to protect them from changes or to limit circulation. "We use PDF extensively to send documents outside the firm for risk-management reasons," says Stan Deutsch, an enterprise systems manager at law firm Morrison & Foerster LLP.

Adobe also owns the widely used PostScript page-description language. During its first quarter ended March 4, Adobe sold more than $160 million of PDF-creating Acrobat software and collected another $20 million licensing PostScript. Last month, Adobe bought software company Macromedia for $3.4 billion in stock to increase its size. The PDF format also will get a boost this month--the International Organization for Standardization is likely to accept a subset of PDF as an electronic-document archiving standard.

Microsoft's plans to make Metro the native way Windows sends data to printers in Longhorn could threaten Adobe's franchise. "It's essentially a PDF replacement," says Rob Helm, an analyst at Directions on Microsoft.

Metro fits into a larger Microsoft tech initiative called XAML, a markup language the company is testing for writing rich Internet applications. There could be a larger market at stake, too. Adobe sells server software that can pull data from PDFs and route it to employees in a work flow. According to Helm, Microsoft plans to deliver development tools for writing similar functions in Office when it ships its Visual Studio 2005 tools suite in October.

Adobe's document format works with software that Microsoft doesn't supply, and its popularity for archiving documents could give companies less incentive to use Office. "Politically, you can see PDF as a bit of a threat," Helm says.

Metro's capabilities resemble an "early version" of PDF, says Pam Deziel, a product marketing director at Adobe. Says Deziel, "It's not uncommon for platform vendors to encroach into areas where application vendors have been adding value."