It was always unlikely people with older computers would upgrade the OS any way, most people get a full new PC. Now with that they won't have to worry about existing apps not working.
Not true - precisely the corporate and medium sized business market that MS are targeting with Win 7 XP mode are the people who have volume license agreements with MS so that they get the latest versions of software as a matter of course.
There were two reasons Vista failed in this market:
- extra hardware demands
- lack of backward compatibility for key apps
Many PCs (and even more laptops) are still supplied without CPU level virtualisation support and so many business who have purchased computers in the last year or two won't necessarily benefit from XP Mode. Older computers just forget it.
A lot of businesses run their computers into the ground - and almost no company is going to have an annual replacement of technology (unless you are actively involved in the development of technology - but those companies won't worry about XP Mode anyway).
The biggest potential problem for MS are the non-adoption of Windows 7 by business users and is precisely why they put XP mode in the code - it is not there for home users and is why it is restricted to the higher cost versions only which are aimed at the pro market. However, there is a bigger problem in my opinion - over-hyping XP Mode in Windows 7 and the fact you don't need to upgrade hardware beyond the Vista required level only to the majority of their target audience frustrated and disappointed.
If MS miss the boat with buisness and Windows 7 they will have a real problem. Businesses will simply stick with Windows XP and with two strikes they can't afford a third - and I suspect many businesses would even start contemlating moving to open source solutions because MS give the impression of being all marketing and no real delivery.
Another potential loss is market share in terms of volume licensing - why pay for a license for software assurance only to find you can't use it?