Windows 7 XP Mode - Maybe

Microsoft is planning on including Virtualization features in Windows 7 that will allow Win7 to run XP apps in a Virtual Machine. This is significantly more complicated than the DOS Virtual Machine that enabled Windows to run DOS apps that began with early version of Windows and continues to this day.

In order to get any kind of decent performance out of an app running in this mode, Microsoft is relying on Intel and AMD to build virtualization technology into their chips. Its good that Intel and AMD have done this in their VT and AMD-V products respectively. However not all of the chips have these features built in (kind of like the old SX vs DX 486 chips and the math coprocessor). Both companies are shipping low-end, economy priced chips without the virtualization technology.

There in lies Microsoft's problem. XP Mode won't run on all PCs. I suspect that Microsoft will either force PC makers to include a "Works with XP Mode" sticker or will have to hack up a version of XP Mode that doesn't rely on chip-based virtualization.

In the meantime, if you are thinking about upgrading to Win7 with apps running in XP Mode, make sure any computer purchases you make have a chip that supports virtualization.