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Knowing Microsoft's history, it won't matter how broken XP Mode is. By Windows 8 or 9, it'll work well enough they can dump the old system entirely and move to something better, like Apple did with Mac OS X. (It will never be perfect, but the number of users they'll lose due to backwards compatibility may become small enough to be worth writing off.)
"they can dump the old system entirely and move to something better"

No... They will move to something newer. It's Microsoft we are talking about.

There is great danger on not making APIs a moving target: competitors like Wine may catch up provide adequate compatibility with stable enough APIs. With a moving target, they have to continuously play catch-up.

There's nothing stopping them from using BSD code again, or buying someone else's OS. Apple did both (they bought NeXT for NeXTStep, but NeXTStep had BSD code).
They need to use standards that are different and incompatible with whatever competitors use. If Microsoft went BSD with, say, Windows 9, it would be easy to port Unix stuff to Windows, which would be nice for them, but it would also be easy to port, say, Windows 9 applications to other unixes, which is a big showstopper for them. They didn't achieve market dominance they enjoy by making easy for their customers to port away Windows apps. Once you write one, you are pretty much stuck.

If you can't suffocate, there is little point in embracing and extending.

It seems there are a lot of Microsoft employees hanging around here. What's going on? Last time I saw, you were astroturfing on Digg...
The author seems to miss the point. This isn't like Apple emulating classic in OS X (or even PowerPC on Intel). This is Microsoft emulating one operating system from within another operating system where the compatibility between them is extremely high. You can take most well written XP applications and run them on Vista without a hitch and the situation will likely be better with Windows 7.

So, if the operating systems are so compatible what's the point of XP mode? There's a huge body of badly written software designed for and test only on XP that are necessary for businesses. These businesses haven't just been hesitant to upgrade to Vista, they aren't even considering it. If it doesn't run their app, there's no point. XP Mode is a way to coax them into upgrading by giving them an option to run their old crappy software on this new OS. That is all.

You're not supposed to be using XP mode to run games, so it's lack of GPU support doesn't matter. You're not supposed to be using it to interact with all sorts of devices. That's what the host operating system, Windows 7, is for. If you're going to virtualize everything in XP, you might as well just be running XP.

No matter which platform you're on, there's always this tug of war between back-compat and pushing the state of the art forward. With VM/emulation-based solutions we can now have our cake and eat it too.

Why virtualize XP? Simple: version 1 of crappy XP app may only run on XP, but version 2 may run on Windows 7. By pushing apps that refuse to update themselves into a corner, the hope is that app developers will be more motivated to keep their crap up to date, and remove the horrible "meh, we'll call on Win95 APIs" laziness. All this can now be done without harming the consumer (who still gets to run his apps).

IMHO virtual XP is one of the more brilliant moves on MS's part in a long time. Their OS has been stagnant for a long time owing a large part to the obsession with backwards compatibility. Thankfully that may now be behind us.

I will never ever understand all the hate for Vista. Excusing the annoyance of UAC, it is their best effort yet. Not without problems. Not without missing features when compared to your favorite OS. Not an incarnation of a perfect OS by an ideal company. But certainly a very functional and reliable product. Maybe my dataset is just too small.

Though, Microsoft just can't do anything right by techies anymore. A comparison to ME? Really? Such fanatical hate.

Agreed. And even if you do have some valid reason to hate Vista, I think most people can agree that Windows 7 is a vast improvement. The author of this article, however, claims that Microsoft is intentionally leaking info to sympathizers to hide its flaws: "Microsoft is conducting a very carefully crafted PR campaign to make Windows 7 seem less broken than the Broken OS". What BS! Does he not know that the Beta and RC are publicly available to anyone who wants to download it?

Of course it shouldn't be a surprise that the article is flamebait considering its source. theinquirer.net should be on the HN auto ban list, in my opinion. When have they ever reported on anything without trying to incite people in the process?

"Does he not know that the Beta and RC are publicly available to anyone who wants to download it?"

That's essentially true, although in the interests of strict accuracy (for people like me who recently went looking to download it), there aren't any versions currently available for download: the Beta hasn't been available for weeks, and the RC won't be posted until May 5th.

http://www.microsoft.com/windows/windows-7/default.aspx

"We're sorry, Windows 7 Beta downloads are no longer available. If you've got a copy of the Beta and need a key, here's where to look...The Windows 7 RC will be available May 5, and you'll be able to download it from this site through July."

This is one of the crappiest articles I've ever read. This tripe doesn't belong on HN!

The author assumes that most people will want to use XPM to run 3d-intensive applications and games, and require access to all their peripherals. Ludicrous.

The author also assures us that there will ZERO 3d support on the VM. Maybe not, but if he were at all familiar with Parallels and VMWare Fusion, he would know that this has been done and Microsoft could do it as well.

He accuses Microsoft of "FUD" while simultaneously refusing to call Vista by its proper name, instead calling it "Broken OS". Hypocrite!

He assumes that everyone else "thinks" that XPM will be some magical transparent layer over 7 that most users won't know about and will magically run all their old applications. He also implicitly accuses Microsoft of misrepresenting XPM in this way. Bullshit! Microsoft has done no such thing. They make clear that this is just a Virtual PC with some Coherence/Unity like functionality, not some magical pixie dust integrated into 7.

Lastly, he completely ignores the potential long term ramifications of this. This is just V1; Microsoft WILL eventually move to a Hyper-V based system in which all previous version of the Windows OS will be transparently virtualized and, if possible, share the hardware. At some point, it WILL be magic pixie dust sprinkled in the operating system, in which your old apps continue to "just work" while Microsoft is finally free to do major housecleaning of the Windows internals.

So, I rest my case. This article is CRAP!

Well, I tossed it in because I was getting a bit sick of the twitter pr0n flu videos, and thought that a discussion of MS joining the desktop virtualization party would be interesting.

Of course, even for TheInq, the author stands out for sporting a somewhat rottweilerish style, which does get a rise out of his readers. Note that he also got some good flack in his comments.

Apart from the scornful hostile tone, I don't think there's much that's technically inaccurate - it's just put in the worst possible light, like an attack lawyer would do. Which isn't really that bad: we can use a bit of critical thinking about what can realistically be had out of desktop virtualization, for what markets (and role vs. 'any browser + cloud apps').