Windows XP Mode is built on the next-generation Virtual PC 7 product line, and requires processor-based virtualisation support in order to run. It comes with "coherence" support, which means that you can run Windows XP applications as if you were running Windows 7 applications. What all this means is that Windows 7 with XPM delivers full Windows XP application compatibility, a massive advantage Windows 7 will have over Windows Vista, and a major selling point for enterprises still using Windows XP now.
However, it has more far-fetching consequences than that. "Obviously, XPM has huge ramifications for Windows going forward," Rivera writes, "By removing the onus of legacy application compatibility from the OS, Microsoft can strip away deadwood technology from future versions of Windows at a speedier clip, because customers who need to run older applications can simply do so with XPM."
I, and literally countless others with me, have been proposing such a solution for ages now, as a means to allow Microsoft to cut the backwards compatibility cruft from the Windows operating system, allowing them to introduce new features and bugfixes at a much faster pace. It seems Microsoft has realised the same thing.
Windows XP Mode will be a completely free download for users of Windows 7 Professional, Enterprise, and Ultimate. It will include a licensed copy of Windows XP SP3, so you don't have to bring your own.
A very wise and very welcome step by Microsoft. I'm not easily excited, but I am a little bit now. I can't wait to test this out!