The big news of the day, as reported on Paul Thurrott's Windows SuperSite (and other outlets), is that Windows 7 will incorporate an application-compatibility feature called Windows XP Mode.

Psst: Windows Vista kinda sorta already has the same thing.

For starters, there's good old Compatibility Mode, a client-side solution that can help get persnickety software running in Vista.

Even better, there's MED-V, Microsoft's newly released server-side virtualization tool. By offering a seamless--and bulletproof--virtual OS environment, it more or less puts to rest any concerns over application compatibility.

Windows 7's XP Mode (a.k.a. XPM) apparently takes the best of MED-V and makes it available to the end user. Here's a snippet from Thurrott's overview:

XP Mode consists of the Virtual PC-based virtual environment and a fully licensed copy of Windows XP with Service Pack 3 (SP3). It will be made available, for free, to users of Windows 7 Professional, Enterprise, and Ultimate editions via a download from the Microsoft web site. (That is, it will not be included in the box with Windows 7, but is considered an out-of-band update, like Windows Live Essentials.)

XPM works much like today's Virtual PC products, but with one important exception: As with the enterprise-based MED-V (Microsoft Enterprise Desktop Virtualization) product, XPM does not require you to run the virtual environment as a separate Windows desktop. Instead, as you install applications inside the virtual XP environment, they are published to the host (Windows 7) OS as well. (With shortcuts placed in the Start Menu.) That way, users can run Windows XP-based applications (like IE 6) alongside Windows 7 applications under a single desktop.

That's great news, no doubt about it--but don't mistake this for some must-have Windows 7 feature that Vista left out. By leveraging MED-V, you can deliver this same seamless Windows XP compatibility to your users.