Many think that Windows 7 will be an upgraded version of Vista. After all, it does look a lot like Vista. But clearly Microsoft wants it to be a trusted XP upgrade as well. That’s why Windows 7 Professional, Enterprise, and Ultimate will include a feature called “Windows XP Mode”.

What Is Windows XP Mode?

Windows XP Mode (XPM) will ensure much better compatibility in Windows 7. It is a built-in virtual machine with a fully licensed copy of Windows XP Professional, SP3, which will be running inside Microsoft’s Virtual PC framework. Rather than being built-in, Windows XP Mode will be available as a free downloadable plug-in for Windows 7 Professional, Enterprise, and Ultimate editions.

According to Paul Thurrott, XPM is built on the next generation Microsoft Virtual PC 7 product line, which requires processor-based virtualization support (Intel and AMD) to be present and enabled on the underlying PC, much like Hyper-V, Microsoft’s server-side virtualization platform. However, XPM is not Hyper-V for the client. It is instead a host-based virtualization solution like Virtual PC; the hardware assistance requirement suggests this will be the logical conclusion of this product line from a technological standpoint. That is, we fully expect future client versions of Windows to include a Hyper-V-based hypervisor.

XPM will allow you to run any XP app, even the trickiest ones, simply by installing it while XP Mode is enabled, and then running it as a virtualized application. Come to think of it, this promises us 100% compatibility, though we still have to wait and see how smoothly Virtual PC itself will get integrated into Windows 7.

Unfortunately, XP Mode is not meant for notebooks and lower-end PCs (Windows 7 Starter and Home are meant for them). Also it remains a question whether Windows XP Mode will be restricted to corporate licenses, or will be available for retail and new PC customers. I hope the latter!