With Microsoft Thursday releasing the Windows XP Mode to manufacturing, the add-on utility will allow the computers equipped with the forthcoming Windows 7 operating system to run older applications built for the Windows XP.

The availability of the XP Mode will coincide with the official launch of Windows 7 - on October 22!

Microsoft has said that the XP Mode is designed for small and mid-sized businesses (SMBs) that have been running older or custom-built applications for the XP; as well as those who skipped the Vista and will be graduating straight to Windows 7.

The XP Mode essentially maintains a backward compatibility with the SMB-specific set of specialized applications through a virtual Windows XP SP3 environment running under Windows Virtual PC.

In a blog post about the XP Mode, Microsoft's Brandon LeBlanc said: "We expect many Windows XP applications to be compatible with Windows 7. Windows XP Mode is meant to serve as an added safety net so small and mid-sized businesses can migrate and run Windows 7 without any roadblocks.

The XP Mode will be available as a free download to customers who buy the Professional, Enterprise and Ultimate editions of Windows 7. The purchase of the new hardware is essential because XP Mode requires PCs with at least 2GB of RAM and 15GB of free hard drive space, along with virtualization-enabled processors from Intel and AMD.