SEATTLE (Reuters) - Microsoft Corp. MSFT.O released a test version of its latest Office suite of applications on Monday, as the world's largest software maker prepares to mark its biggest product launch since 2001.

Microsoft expects more than 500,000 customers, developers and software partners to snap up the beta 2 version of its document, spreadsheet, e-mail and presentation software, which is being offered for free.

The formal launch of Office 2003 this summer, Microsoft's second-most profitable business after its Windows operating system, is seen as the most significant software product launch by the company since the debut of Windows XP in October 2001.

Microsoft is no longer describing Office as a "suite" of applications, but rather a "system" that includes more than the standard quartet of Word, Excel, PowerPoint and Outlook.

As with past software upgrades, Microsoft is adding plethora of new features to its Office product.

Microsoft is now including its Web page authoring software FrontPage in the Office family as well as two new products: InfoPath, which lets users create forms for collecting and gathering Web-based information; and OneNote, a note-taking application.

Outlook, the e-mail, contacts and calendar managing program, now includes an e-mail spam filter. A slightly more advanced version called "Outlook with Business Contact Manager" will also be released.

Microsoft is also building digital rights management technology into Office, which will let users control access to documents they create.

NEW FEATURE

A new feature will also be available on several Office programs allowing users to call up information from databases or from other sources on the Web by using "smart tags," a system based on the computer language XML that locates and identifies content.

For example, someone using the upcoming version of the popular program Excel could copy a properly configured chart from the Internet and display and analyze the data in its raw form.

In a related move, Factiva, a news database provided by Reuters Group Plc RTR.L and Dow Jones & Co. DJ.N , will be incorporated into Office, the companies said in a statement.

The beta 2 kit, which includes a beta version of server software that is needed to enable the collaborative features of Office, consists of 12 CD-ROMS.

Users who obtain the beta 2 version will be asked to report any glitches and provide feedback before the final version is released this summer.

Microsoft has not yet given a specific date for the launch of Office 2003 or announced pricing.

This summer's release of Office will also mark the first major release of software since Microsoft's transition to a new licensing program that encourages customers to pay yearly fees for the latest versions of software.

Analysts have said that the main challenge for the Redmond, Washington-based software giant is to convince users that the newest version of Office is worth the higher premiums that they pay to participate in the Software Assurance program.

Although Office was pulling in more revenue than Windows in mid-2001, its sales have fallen behind those for Windows.

For the quarter ended Dec. 31, the software division responsible for Windows had $2.5 billion in sales compared to sales of $2.3 billion for the division that produces Office.