It's been a year since we first learned about Windows XP Mode. (If you're not familiar, Windows XP Mode is a free add-on download for Windows 7 that configures a copy of Windows XP which runs in a VM on top of the Windows 7 host. The idea is if you have apps that aren't Win7 compatible you can just run them in XP in the background.)
When I first wrote about XP Mode last year, I couldn't decide whether it was "brilliant" or "brilliantly stupid." Now that I've been using Windows 7 for awhile I finally took the plunge to play with Windows XP Mode. My opinion now? meh.
On the surface Windows XP Mode seems fine. It's simple enough to download. You select your Win7 version, platform, and language and then download three separate components: Microsoft Virtual PC, The Windows XP mode disk image file, and a "Windows XP Mode Update" which is a patch that lets XP mode run on clients that don't have hardware virtualization support in their CPUs. (I think that's internally known at Microsoft as the "Alessandro Patch.")
Once you get this thing downloaded it's pretty easy to get running. The Windows XP disk image you download is built with SP3 with IE6 and it's all pre-activated and ready to go. So all you have to do is fire it up as an admin and install your old school apps. XP Mode automatically populates the XP apps to the Start Menu of your Win7 host, so users are able to access them easily. And the XP apps run via a RemoteApp seamless window, so it feels pretty normal to the user too (apart from the crazy long start time for the first app as the VM boots).
XP Mode is definitely rough around the edges. It truly feels like a stripped down version of Virtual PC, complete with all its oddities. For example, your VM doesn't inherit your host's time zone, keyboard settings, or localization settings, and I never did get all my mouse gestures working properly in the XP VM that worked fine on the Win7 host.
Also since apps running in the XP Mode VM all run via the same Virtual PC process on the host, all your XP apps are stacked on top of each other in the Win7 taskbar instead of each having their own space.
Can you use Windows XP mode in an enterprise environment?
For the record, Microsoft suggests that Windows XP mode is for small and medium-sized businesses. (Yeah, because they're going to understand this thing!) Enterprise customers are encouraged to use MED-V (which as of last month finally supports Windows 7, so hey, you can actually use it how it's advertised now!)
In either case you can add the XP mode VMs to a domain (or you outright replace the image Microsoft provides with your own). The real problem is that XP mode means you're managing another entire desktop for your users. So unless you have SCCM or Altiris or something, that can get kind of hairy. (Or you choose MED-V, MokaFive, Wanova, etc.)
Probably the ultimate irony is that while Microsoft says XP Mode is geared for SMBs, it's actually big enterprises who are most likely to have apps that won't run on Windows 7. (I'm just guessing that enterprises will have more problem in-house-developed apps, while SMBs probably have more COTS stuff.)
Regardless of the size of the organization, Microsoft is really pushing their program compatibility troubleshooter in Windows 7 which can hopefully help get your apps running without having to resort to running XP in a VM.
The bottom line about Windows XP Mode I guess is that it exists. It works more-or-less. It's not stellar and I don't see it really impacting us though.
If nothing else, it demonstrates the value of Microsoft distributing Windows directly to consumers as a ready-to-run disk image! :)