Microsoft is incorporating its Bitlocker encryption technology into the forthcoming version of Windows Longhorn Server.

Bitlocker is scheduled to be incorporated into Windows Vista to encrypt the contents of laptop hard drives, preventing data theft if a system is lost.

The technology uses a USB memory key, Active Directory or the industry standard Trusted Platform Module (TPM) 1.2 security chip to store encryption keys.

However, Microsoft now plans to bring the same functionality to its forthcoming server operating system to protect branch office servers, the company said at the Windows Hardware Engineering Conference in Seattle.

A branch office server is a small computer that acts as an email or file server and typically sits in a wiring closet or under a desk in a small regional office.

But as servers today do not typically contain TPM chips, Microsoft said it is talking to vendors to have the technology supported.

"It is becoming more apparent how often these systems are disappearing," said Mike Tricker, a programme manager for Windows core platform architecture.

"Somebody decides that it's a really nice box to have at home and then all your corporate data has just disappeared."

Mike Nash, corporate vice president at Microsoft's security technology unit, told vnunet.com in an interview that the technology could also be useful for enterprises. "It is more about the value of the data than the size of the company," he said.

Full disk encryption will prevent thieves from accessing the data on the system's drive, but criminals will still be able to use the unit if they swap out the hard drive.

Windows Longhorn Server is currently in beta and is scheduled for release by late 2007. 

• The Silicon Valley Sleuth blog has a podcast of the interview with Microsoft security boss Mike Nash