Microsoft Makes XML the File Format for the Next Version of Microsoft Office: :
Q&A: Senior Vice President Steven Sinofsky explains how making XML the default file format is likely to help customers
"A key benefit of the new format is substantially smaller file sizes -- up to 75-percent smaller than comparable Office 2003 files. This is one of the advantages we get out of using the combination of XML and ZIP technologies for storing our files. Since XML is a text based format which compresses very well, and the ZIP container supports compressing the contents, we are able to achieve these significant reductions in file size."