One of the tools Microsoft
developed to aid companies in transitioning from Windows XP
to Windows 7 was a free virtualized copy of Windows XP. Once downloaded and installed, users with XP-specific applications could run them seamlessly alongside Windows 7
. Inventing such a practical, useful tool apparently frightened someone at Microsoft and XP Mode was hamstrung with a requirement that crippled its usefulness. In order to use Microsoft's free virtual OS, the CPU in question had to support hardware virtualization.
Windows XP mode running simultaneously with Win 7. Image by Paul Thurrott
Both AMD and Intel support hardware virtualization (AMD-V and VT-x respectively), but AMD
restricted the technology much less than Intel
did. Intel opted to use VT-x as a premium feature, which led to spotty coverage and occasional customer confusion. At one point, Intel had a line of 45nm quad-core processors that were running cheaper (and faster) than the older 65nm Core 2 Quad 6600. The difference between the two was VT-x, the Q6600 supported it, the other chips didn't.
Happily, this is no longer an issue. Microsoft has removed the hardware virtualization requirement for Windows XP, making it available to businesses and consumers who may have previously been unable to utilize it. The updated version is available here; there's no word yet on any performance differences between hardware and software virtualization.