Windows XP Mode is a stand-alone feature specifically designed to help small businesses using Windows XP applications move to Windows 7 with ease. XP Mode is an optional feature of the Windows 7 Professional, Enterprise and Ultimate editions.

Accounting, inventory and other productivity applications will benefit the most from Windows XP Mode. The feature isn't aimed at consumer applications because those use a lot of hardware interfaces, including 3-D graphics, audio and TV tuners, that won't work well with virtualization .

"The sweet spot for applications that run in Windows Virtual PC is business and productivity applications that tend to conform to the basic Windows application programming interface (API)," said Scott Woodgate, Microsoft's director of desktop virtualization.

An Alternative for Big Business

"Small businesses operate under constrained resources and are highly sensitive to the time and expense required to upgrade their PCs," he added. "Windows XP Mode provides small businesses with the ability to run many Windows XP applications, saving time and expense, but Windows XP Mode does not have 100 percent compatibility with all Windows XP applications."

Windows XP Mode is actually a combination of two features. The first includes a prepackaged virtual Windows XP environment, according to Woodgate. The second is Windows Virtual PC, which runs the virtual Windows XP environment.

Because XP Mode is designed for small businesses, Microsoft is offering an alternative for larger businesses that need to reduce the cost of installing virtual PCs across hundreds of users. It is expected to be available within 90 days of the Windows 7 release.

That solution is MED-V, one of the six components in the Microsoft Desktop Optimization Pack. MED-V is the management tool for Windows Virtual PC and builds on top of Windows Virtual PC to run two operating systems on one device.

"Basically, by adding virtual image delivery and policy-based provisioning, it facilitates centralized management," Woodgate said. "This is a great tool for IT pros who want to reduce the cost of managing and deploying Windows Virtual PC."

A Lot of Management

Not so much, according to Michael Silver, vice president of research at Gartner. "Both are designed to help organizations deploy Windows 7 before their applications can run on it," Silver said. "But that's adding a lot of bits, management and surface area to each PC."

"We would suggest that organizations avoid these solutions as much as possible," he added. "Prepare correctly for Windows 7, fix your apps, and use XP Mode very sparingly."

The simplest way to get Windows XP Mode is to get it preinstalled on a PC from an original equipment manufacturer or through a local reseller, according to Microsoft. Doing so will require the least configuration for small and midsize businesses.

Alternatively, Windows XP Mode can also be acquired by Windows 7 Professional, Ultimate and Enterprise customers by downloading it from the Microsoft Web site.