The future of Microsoft's Virtual PC emulation software was already in the balance before Apple released Boot Camp last week - and now Intel-based Macs can boot directly into Windows XP, VPC's future seems uncertain.

"We are continuing to work with Apple on a possible next version of Virtual PC," said Amanda Lefebvre, marketing manager for Microsoft's Mac Business Unit. "We still don't have all the answers, but we are trying to understand what changes need to happen in their operating system and what changes we need to make."

Virtual PC's future was thrown into flux by Apple's move to Intel-built processors. While Microsoft has committed to developing an Intel-native version of its Office suite, Virtual PC was notably absent from a five-year technology agreement between Apple and Microsoft that was unveiled at January's Macworld Expo.

Since Virtual PC emulates the Windows environment, the move away from PowerPC chips requires substantial changes to Virtual PC. "This is like building a brand new version for us," Lefebvre said. "It's not just a new operating system, it's new hardware, too - this is a really big transition. It's hard to say right now what it will look like or when it will be."

Microsoft continues to believe there's a market for emulation software among Mac users; the company is unsure, however, just what kind of market that will be. Owners of PowerPC-based Macs would still need the product to run Windows and other operating systems on their hardware; similarly, Intel-based Mac owners may prefer to run Windows without having to boot out of the Mac OS, as Boot Camp currently requires.

"Virtual PC customers have told us that the seamless interoperability between the two operating systems is important to the work that they do," Lefebvre said. "Being able to stay in the Mac OS and still access Windows without having to shutdown is important to them."

While the Macintosh Business Unit is busy contemplating the future of Virtual PC, Microsoft's Windows team was busy welcoming Apple and its customers to Windows.

"Windows is a great operating system, said Kevin Kutz, director of Microsoft Windows Client in a statement provided to Macworld. "We're pleased that Apple customers are excited about running it, and that Apple is responding to meet the demand."