It depends what document features you used in your document. If you
added features new to Office 2007 (e.g. SmartArt, Charts, etc), then
those will be saved as images in the doc format, as 97-2003 can't deal
with them. Hence something that is only represented as XML in the
OpenXML format then becomes an image plus XML stored in a special field
of the binary file format. Therefore, the file size increases.
Also, keep in mind that the docx format is a zip container. That means
everything is compressed inside the docx container, which reduces the
overall file size. One of the selling points of 2007 is that it has a
substantially smaller file size than the old binary formats.
I don't know what Microsoft should be doing about this. It's not a
problem, it's a feature (well, multiple) of Office 2007.
I hope this explains things.

Patrick Schmid [OneNote MVP]
--------------
http://pschmid.net
***
Office 2007 Beta 2 Technical Refresh (B2TR):
http://pschmid.net/blog/2006/09/18/43
***
Customize Office 2007: http://pschmid.net/office2007/customize
OneNote 2007: http://pschmid.net/office2007/onenote
***
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"Siddharth Kale" <Siddharth Kale@discussions.microsoft.com> wrote in
message news:15D6FA85-A316-4560-BD5C-C8D61E7CF5B6@microsoft.com:

> Unisys corporation is assessing MOSS 2007/Office12. One of the major concerns
> regarding the apps is the inflation of file size when saving a file in office
> beta2TR to office11 format. The increase in file size huge! A word document
> saved in docX is 720KB while saved in doc is 1340KB.
>
> Can someone please explain why this happens and what steps Microsoft is
> taking to tackle this problem?