(FORTUNE Magazine) – In the long history of invention, success has kissed only a handful of combo products--you know, two or more tools that are good individually but have been fused together in an attempt to create an even better hybrid. Classics include the Swiss Army knife, of course, the clock radio, the peanut butter and jelly sandwich, and maybe the toaster oven. But in terms of widespread adoption and revenue, it's hard to top Microsoft Office.

Comprising four very good individual products--a word processor (Word), a spreadsheet (Excel), a presentation tool (PowerPoint), and a personal-information manager (Outlook)--Office has been a cash cow for Microsoft over the years. And Microsoft is milking it yet again with the release of Office XP for Windows. Office XP (which stands for "experience") is not the same thing as Windows XP, Microsoft's new operating system, expected in October.

Perhaps you just bought Office 2000. Or maybe you're still using Office 97 or some other vintage version of the office-productivity tool suite. Once again Microsoft is back, claiming the latest version is new and improved, and once again it's true. The new Office XP is the best one yet. Microsoft has increased the already prodigious number of features in its programs, added some clever new ones to help the user take advantage of the old ones, and still managed the impressive feat of making it easier to use. The interface is cleaner and neater.

It's easily better than its distant competition, Lotus SmartSuite, Corel WordPerfect, and Sun Microsystems' StarOffice. Even so, how many clock radios can one consume in a lifetime, especially when there have been no earth-shaking breakthroughs in either clocks or radios? At some point, and I'm afraid I've reached mine, the willingness to render unto Gates & Co. the regular $200 or $300 biennial tribute to upgrade Office becomes less automatic. If you're shopping for a new computer, however, or if you've reached some level of frustration with your current version of Office, the new model is definitely worth a look.

There are basically two Office XPs, standard and professional. The standard includes year 2002 releases of Word, Excel, Outlook, and PowerPoint, all of which are incrementally better than their year-2000 incarnations. It costs $239 to upgrade from a previous Office and $479 for the full, install-it-from-scratch product. The professional version has everything from the standard one, plus the Access 2002 database program. It costs $329 to upgrade and $579 for the full package. For more money one can add Web-design tools. Pricey, yes, but how else is Microsoft going to pay its legal bills?

I've been using Office XP for some time now and don't even pretend to have tested all its new features, especially in the area of workplace collaboration. But from a consumer perspective several new features are worthy of praise. Topping the list is the apparent demise of Clippy, the universally reviled animated "office assistant" who popped up onscreen, usually unbidden, to offer guidance on common tasks or just to smirk. Microsoft added Clippy in an effort to make Office friendlier and easier to use, but for most users it was the software counterpart to Jar-Jar Binks in the most recent Star Wars film--a source of profound annoyance. Clippy did not exactly die in Office XP; he is now undead, wandering like a zombie in the mists of the Help menu, waiting to be summoned back to life.

Task Panes now appear as windows on the right side of the screen in any application to offer guidance on common tasks and to put commonly used software tools just a click or two away. Many actions that previously required scrolling through menu bars are now easily at hand in Task Panes.

Smart Tags are small, context-sensitive icons that perform lots of tasks, ranging from formatting to looking up names and addresses. If Smart Tags are enabled, the user can type a name and a list of available options appears: Send e-mail, open a contact file, schedule a meeting, and so on. Type a stock symbol, and the Smart Tag offers to look up the current price from MSN Money Central. Type an address and it offers to look up driving directions. You get the idea.

Speech recognition has been improved. It's still not to Star Trek levels, at which one can simply talk to the computer and have it respond, but Office XP signals that the next major user interface for personal computers will be speech. With patience, one can dictate a letter, correct errors (and there will be a lot of them), and issue basic commands.

Document recovery: While it would be nicer if Microsoft figured out a way to keep Office from crashing in the first place, it's now easier to recover lost files.

Integrated e-mail: Many people have multiple e-mail accounts, and the new Office integrates them in Outlook.

The list goes on and on. Overall, Microsoft has created another winner.