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Computerworld - Microsoft Corp. touts that Windows 7 is nimble enough to run on underpowered netbooks. But the company also admits that its enticing new XP Mode may not work on netbooks or many other computers of recent vintage.

The news that people will not be able to run applications designed for XP on Windows 7 by tapping virtualization, as XP Mode supports, is discouraging for cash-strapped consumers and small businesses that hoped to upgrade without ditching existing hardware or upgrading their software.

Debuting on the Windows 7 Release Candidate to MSDN and TechNet subscribers today, and the general public on May 5, XP Mode has several strict requirements: 2GB of RAM; Windows 7 Professional, Enterprise or Ultimate editions; and most limiting, CPU hardware virtualization support.

RAM is inexpensive, and vendors such as Hewlett-Packard Co. have successfully tested netbooks running all versions of Windows 7.

The problem for netbooks is that most run Intel Corp.'s Atom N270 processor, which lacks Intel's VT hardware virtualization. The same goes for the N270's successor, the N280, which only recently began shipping.

Lack of hardware virtualization support is also a problem for Intel's Atom CPUs for so-called net-top minidesktop PCs, the 230 and the dual-core 330.

Several members of Intel's Atom Z5 series of CPUs (formerly known as Silverthorne) do support VT. But they are meant for ultramobile PCs and haven't been used on many netbooks yet.

Jeff Price, director of product management for Windows, acknowledged that the lack of hardware virtualization support may also be a stumbling block for many recent notebook and desktop PCs.

Intel and Advanced Micro Devices Inc. both began offering chips with onboard virtualization more than three years ago. AMD's version is called AMD-V, formerly code-named Pacifica.

Intel's Celeron, Pentium Dual-Core and Pentium M chips all lack VT. Even some Pentium D and Core and Core 2 chips lack VT. Similarly, AMD's Sempron and older Athlon 64 chips also lack AMD-V.

Users can check whether their computers support hardware virtualization by downloading and running a free application called SecurAble.

Without hardware virtualization, users can still run Windows XP virtually using the free Virtual PC 2007 from Microsoft.

Performance won't be as fast as XP Mode, which relies on a newer version of Virtual PC and runs XP at what "feels like native speed to me," Price said, though he warned users not to expect to play 3-D games well in XP Mode.

There's also the issue of price. Running Windows XP through Virtual PC requires users to own a separate XP license, Price said. Windows 7's XP Mode doesn't require a separate XP license.

If running Virtual PC is not a good option, people can use Windows 7's "compatibility mode."

Microsoft has long offered this feature. Windows Vista, for instance, can emulate versions of Windows going back to Windows 95, Price said.

Compatibility mode is nimbler than Virtual PC or XP Mode, but the emulation may not be as error-proof, Price said.

"This is simply tuning a certain set of behaviors in the OS such as memory management," Price said. "It's not running any XP code; it's just changing the settings."

Windows 7 will have the same compatibility modes as Vista, while adding one for Vista itself.

Price said Vista compatibility mode in Windows 7 won't get much usage, however, because apart from antivirus and similar software that hook into Windows' kernel, most applications written for Vista should work well in Windows 7, and vice versa.

Read more about Windows in Computerworld's Windows Topic Center.