Windows XP Mode (XPM) is a new addition to Windows 7 RC. It is successor to Virtual PC 2007, Windows XP Mode is intended for release with Windows 7. Unlike its predecessors, this version supports only Windows 7 host operating systems and requires hardware virtualization support.

At the core of XPM are Virtual PC 7 (VPC) and the Remote Desktop Protocol (RDP) protocol. While VPC’s purpose is pretty clear, RDP’s may not. XPM makes heavy use of RDP features such as Remote Applications Integrated Locally (RAIL), compositing, and multi-monitor support.

Features:

• USB support and redirection – connect peripherals such as flash drives and digital cameras, and print from the guest to host OS printers
• Seamless application publishing and launching – run Windows XP Mode applications directly from the Windows 7 desktop.
• Support for multithreading – run multiple virtual machines concurrently, each in its own thread for improved stability and performance.
• Smart card redirection – use smart cards connected to the host.
• Integration with Windows Explorer – manage all VMs from a single Explorer folder (%USER%\Virtual Machines)

System Requirements:

• 1.0 GHz or higher processor (32-bit or 64-bit)  AMD-V or Intel-VT hardware virtualization must be supported and enabled.
• 2 GB of RAM recommended
• Additional 15 GB of hard disk space per virtual Windows environment recommended

It will be available free of charge of Windows 7 or can be downloaded from the Microsoft website. You don’t need to pay for virtual machine package i.e. a pre-installed, licensed copy of Windows XP SP3 as its guest OS.