This is simply the next version of Virtual PC which adds native host OS integration (removes the desktop and start menu/taskbar from the guest OS). This should in an ideal scenario work with any OS, esp Vista, but Microsoft is trying to sell if off as an exclusive Windows 7 feature for business reasons. VMWare Workstation 6.5 released in September 2008 aleady does this (called Unity mode instead of XP Mode) and isn't locked for Windows 7 hosts and Windows XP guests. Sadly, THIS WON'T GIVE ME BACK THE FEATURES REMOVED FROM WINDOWS VISTA OR WINDOWS 7 WITH NATIVE INTEGRATION. Users will still have to manage and patch this "Virtual XP".
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