The company had announced last month that the add-on, called Windows XP Mode (XPM), will be available to users of the Windows 7 Professional, Ultimate and Enterprise versions once the new operating system ships later this year. Professional and Ultimate are the two highest-priced versions of Windows 7, while Enterprise is sold only through volume licensing agreements.
Analysts agreed that Microsoft needs to offer the add-on to help persuade users to upgrade to Windows 7, but they also noted that it could cause multiple problems for corporate users.
"This will help the uptake for Windows 7, because it removes one more gotcha, and that's never a bad thing to do," said Michael Cherry, an analyst at Directions on Microsoft.
Cherry added that Microsoft's decision to use virtualization to provide backward compatibility is a nice "safety net" for users who lack access to Microsoft's Enterprise Desktop Virtualization technology.
Michael Silver, an analyst at Gartner, echoed Cherry's take on what motivated Microsoft to offer XPM, but he added that it broadly expands support requirements.
"You'll have to support two versions of Windows," he said. "Each needs to be secured, antivirused, firewalled and patched. If a company has 10,000 PCs, that's 20,000 instances of Windows."
Silver also noted that the add-on might lead companies to neglect the important task of making sure their applications are compatible with Windows 7.
"This is a great Band-Aid, but companies need to heal their applications," he said. "They'll be doing themselves a disservice if, because of XPM, they're not making sure that all their apps support Windows 7."
Silver added that while Microsoft is effectively extending the life of Windows XP by offering it as a Windows 7 add-on, it hasn't changed its plan to shift the older operating system out of mainstream support and provide only what it calls "extended" support only until mid-April 2014.
"[XPM] will give some a false sense of security," Silver warned. "What happens in 2014, when XP isn't supported anymore? I think companies will be much better off if they make all their applications run on Windows 7."