Why all the fuss over XP Mode?

Friday, Microsoft announced that it plans to release a free add-on for business editions of Windows 7. Windows XP Mode will use a customized version of Virtual PC to run a fully licensed, preconfigured copy of Windows XP in a virtual machine. So what's the big deal? It's not the technology, it's the licensing. I've got more details.

For those who were out enjoying the sunshine over the weekend and not glued to a web browser, you missed at least one interesting Windows 7 development. Friday, Microsoft announced that it plans to release an add-on for Windows 7 called Windows XP Mode. It’s aimed primarily at business customers who are deferring their OS upgrades because they have old applications that require Windows XP and won’t run on the Vista\Win7 platform. When Windows 7 is released, they’ll able to download and install an add-on program that runs a customized version (some might call it “light”) of Windows Virtual PC in so-called seamless mode. The no-cost download will include a preconfigured copy of Windows XP SP3 licensed for use on business editions of Windows 7.

Here’s what it looks like. That’s IE6 on XP, running in a window alongside IE8 on Windows 7. Normally, you can only have one version of Internet Explorer installed on Windows at any one time, and you can't install IE6 or IE7 at all on Windows 7.

You can read Mary Jo Foley’s report here, get a closer look at an early pre-beta release of the feature from Rafael Rivera and Paul Thurrott, and then read Jason Perlow’s epic “I told you so,”, which uses a headline type size normally associated with natural disasters and declarations of war.

XP Mode is a nice addition for corporate customers who want to be able to run a line-of-business application on client PCs without actually revising the program code. Of course, they can already do this today. This solution sounds very similar to Microsoft Enterprise Desktop Virtualization (MED-V), which is available for enterprise customers (released earlier this year), minus the management tools and intrastructure requiermetns. Small businesses can use third-party software to host virtual machines. In fact, I’m running Sun’s free Virtual Box in seamless mode on the Windows 7 RC, with a licensed copy of Windows XP SP3 in it. As you can see, it's nearly identical to what you see in XP Mode .

It’s not quite as elegant as what Microsoft is promising (having the XP taskbar sitting atop the Windows 7 taskbar is pretty ugly, in fact). But it works just fine, and a corporate IT shop could easily deploy this as a solution today, on Vista or Windows 7.

So why is XP Mode a big deal? It’s not the technology, it’s the licensing. For Windows Vista, Microsoft allows customers running Enterprise edition under a volume license to run up to four virtual machines with the same Windows license (downgrade rights mean the VM can run an earlier version of Windows like XP Professional). Everyone else (yes, I’m looking at the entire small business sector here), you need to buy a separate XP license to run in that VM. That’s a lot of money to pay just to run one incompatible app.

For Windows 7, Microsoft has removed that objection. If you buy Windows 7 Professional, you get the right to download and use a licensed copy of XP, neatly packaged in a VHD and ready to run in the XP Mode environment. I haven’t tested it myself ("too early for beta," I'm told), but it sounds like the integration with Windows 7 is slick. (Those who are interested in the gory technical details, go read Rafael Rivera’s breakdown in Windows XP Mode Internals). If you only want to run a single XP VM on Windows, this sounds like it will be a lot easier than using a full-featured virtualization package like Virtual Box or VMWare.

XP Mode will cover the needs of most customers; those who want to run multiple VMs or host an OS other than XP will want to consider higher-end virtualization software, like VMWare Workstation, Virtual Box, and the new version of Windows Virtual PC. It looks like Microsoft is about to catch up with its competitors (finally) on features like USB support and “seamless mode.”

Strictly speaking, it doesn’t seem accurate to call this a feature of Windows 7. Microsoft says that the XP Mode bits will not be included as part of the Windows 7 RTM package. Instead, XP Mode will be “available either through pre-installation by your PC manufacturer or via a no cost download.” That’s a smart decision. The VHD uses up a large chunk of disk space, and most customers won’t need it. It also buys extra time for development, in much the same way that Hyper-V lagged the initial release of Windows Server 2008.

Don’t get me wrong, I think delivering XP Mode is a smart idea on Microsoft’s part. The real news is that it actually provides a licensed copy of XP SP3 and distributes it in a prepackaged VHD format. That removes the cost of the extra license and the hassle of setting up virtualization software. It’s another in a long line of objections that are neatly handled by Windows 7.