Parallels is developing a tool that will allow users to run Windows XP applications on machines running Windows 7.

Last month, Microsoft said that it would include an add-on to Windows 7 that will allows users to run applications designed for Windows XP in a virtual machine. The announcement was noteworthy, because it was the first time Microsoft relied on virtualisation technology to provide backward compatibility.

Meanwhile virtualisation vendor Parallels did not reveal too much detail about its offering, other than to confirm that it is indeed working on a XP/Win 7 virtualisation tool.

"Parallels today invited consumers and businesses to sign-up to beta test a solution that enables users to easily migrate to Windows 7 and run legacy Windows programs side-by-side with Windows 7 applications," said the company in an official statement.

Parallels said the new solution would utilise its high performance adaptive hypervisor, as well as technologies such as Coherence and SmartSelect, "innovations that enable users to seamlessly run differing OSs and their applications side-by-side."

"The solution also integrates Parallels' easy-to-use migration tools, such as Parallels Transporter, allowing users to quickly transfer applications and data from older Windows operating systems such as Windows 2000, XP or Vista to a new Windows 7 machine," the company said.

However, it seems that unlike the Microsoft offering, Parallels version will offer something unique. This is because with the Microsoft option, in order to use XP Mode, the user's computer requires an Intel CPU with Intel VT, or an AMD processor with AMD-V.

The problem with this is that many laptops, especially netbooks etc, do not contain the necessary chips. Intel's Celeron and Atom chips for example do not have the virtualisation technology, and neither does AMD's Sempron line.

"Yes we are working on a product to enable people to run legacy applications on Windows 7," a Parallels spokeswoman told Techworld. "The main thing of interest however is Win 7's XP mode has specific hardware requirements. For example, the hardware has to be based on either Intel VTX or AMD's v technology."

"Netbooks often do not contain that technology," she added. "Our version will not have that limitation."

The spokeswoman could not confirm a release date for the product, or even an official name for the forthcoming tool.