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Concerning this:

Is this any different than me downloading Virtual PC and then just manually installing XP?

I am confused, is this just marketing talk or is there an underlying technical difference (and advantage)?

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up vote 7 down vote accepted

Virtual PC 2007 does not have the tight integration between host/guest systems that XP mode has. Virtual PC for Windows 7 does have the same features as the pre-configured XP mode.

With XP mode applications installed in XP are directly visible on the start menu in Windows 7 and can be launched from there. Also when you launch the app it will appear as you run it in Win 7 and not in a virtual machine.

The big convenience with XP mode is that you get the XP license for free and everything is already configured so no extra work needed on your part.

The second feature have been available in vmware/virtualbox at least on other platforms.

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+1 Nice job of keeping information up to date! – alex Oct 23 '09 at 18:08

It shouldn't be any different in execution than downloading virtual pc and installing XP. The difference is in the licensing. XP Mode comes free with certain skus of Windows 7 whereas you would have to have an XP license to do the virtual pc method. XP mode also saves the headache of having to set everything up. XP mode is just an image you use in virtual pc.

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