The first approach uses a feature called Boot Camp that comes free on every new Mac. Using Boot Camp, the entire Mac is turned into a Windows PC, with the full capabilities and speed of a standard Windows machine. No trace of the Mac operating system is left running. The downside is that you can’t run Windows and Mac programs side by side.

The second approach uses one of two third-party programs to create a virtual Windows PC inside your Mac. This faux Windows machine runs at normal speeds and can operate simultaneously with the Mac’s own operating system. Programs native to each operating system can run side by side. The downside is that, because Windows doesn’t get complete control of the computer’s hardware, it isn’t quite as fast as in Boot Camp, and a few of its functions, like 3D graphics, don’t work as well.

This latter method is enabled by two excellent, closely matched $80 programs: Parallels, from a Swiss-based company of the same name, and Fusion, from VMWare, a U.S. company. It is Fusion that just got better, because VMWare just issued version 2.0 of the product with lots of new features, some of which let it catch up to the older Parallels and some of which push it ahead.

I’ve been testing Fusion 2.0 for a couple of weeks on two different Macs, and using it to run both Windows XP and Windows Vista. My verdict is that while you won’t go wrong with Parallels, Fusion edges it out as the better product.

The new Fusion 2.0 is a free upgrade for owners of version 1.0. It can be obtained at vmware.com/mac and at various retailers.

Like Boot Camp and Parallels, Fusion requires you to obtain and install a fresh, boxed, full version of Windows on your Mac. But once you’ve done that, your Mac becomes two computers in one. If you need to run programs that are available only on Windows, you can do so with ease.

For instance, as I write this column on a MacBook pro laptop, using a Macintosh word processor, I am using Fusion 2.0 to simultaneously run Google’s new Chrome browser, which is so far available for Windows only. I can switch between the two with a couple of keystrokes and copy text from one to the other.

Like Parallels, Fusion allows you to run Windows programs in one of three ways. You can see the entire Windows desktop, with Windows programs running within it, inside its own window on your Mac. Or, using a feature called “Unity,” each Windows program can float free, as if it were just another Mac program, with the Windows desktop invisible. If you minimize a Windows program, it disappears into an icon in the Mac’s Dock, just as Mac programs do.

Finally, you can devote the entire screen to the Windows desktop and hide the Mac operating system entirely.

Parallels can also do these things. Both programs can now also “mirror” your most common Windows and Mac file folders so that, for instance, all of the files in your Mac’s Pictures folder also appear in the My Pictures folder in Windows XP. This is a new addition to Fusion, as is the ability to take multiple “snapshots” of your Windows virtual machine, so if something goes wrong, you can roll back to a previous state when things were stable.

But Fusion has some other features Parallels lacks. For example, it allows you to automatically take those protective snapshots at timed intervals. It also permits you to completely customize keyboard commands so that the same common key combinations work in both Windows and Mac programs. It allows the faux Windows machine to take full advantage of multiple monitors, if you have them.

Fusion also uses a more modern and capable version of the proprietary 3-D graphics system in Windows, called DirectX. That means some Windows-only games and other programs that won’t work in Parallels will work in Fusion. I successfully tested two such programs, both from Microsoft: Worldwide Telescope and Photosynth.

And, in my experience, Fusion is a bit faster than Parallels. Both programs put a strain on your Mac when performing major tasks, like starting up or shutting down Windows. But Fusion seems to affect the Mac less. And, unlike Parallels, it can make Windows quicker by optionally assigning it control of the multiple “cores” in most modern processor chips.

Fusion also offers a one-year free subscription to Windows security software, while Parallels offers only a six-month subscription.

However, Fusion has its limits. Like Parallels, it cannot run the 3-D visual effects in Windows Vista. And, in my tests, it wouldn’t allow Windows running on one of my Macs to use the printer that was configured on the Mac, although that feature did work on my other test Mac.

In my view, Fusion is now the better choice for running Windows on a Mac virtually.

Find all of Walt Mossberg’s columns and videos online, free, at the All Things Digital Web site, walt.allthingsd.com.

Write to Walt Mossberg at mossberg@wsj.com

This contrast has appeared sharper in recent years, as Microsoft’s Windows Vista operating system received a tepid critical response compared with Apple’s Leopard platform and as the company’s Live Web search service has slipped further behind Google’s. In addition, Microsoft’s cellphone software, Windows Mobile, looks old and creaky compared with Apple’s sleek iPhone and Google’s forthcoming Android mobile operating system.

But innovation does exist at Microsoft’s sprawling Redmond, Wash., campus. For instance, last year’s daring and radical redesign of Microsoft Office has been a critical and commercial success.

Now, there’s a sort of guerrilla team inside Microsoft designed to churn out innovative products more often and more rapidly. Called Live Labs, the unit is a small operation that aims to turn technology theories into real, Web-based products relatively quickly. It has only about 125 employees, and even that modest number is broken up into smaller teams tackling specific projects.

This week, Microsoft Live Labs is releasing its first broad consumer Web service, called Photosynth. This service turns multiple photos of a scene or site — say, an art gallery or a building — into a 3-D scene you can virtually “walk” through on the Web.

Unlike a simple 2-D panorama, which many photo programs can create from several pictures, a Photosynth creation, called a “synth,” is a virtual 3-D environment. It gives you the feeling you are in the middle of a room looking around, or circumnavigating a building or object. You can travel through a scene both laterally and vertically, and zoom in to see detailed, higher-resolution views of objects inside the synth, such as paintings on a wall.

For instance, you don’t just see a long, flat picture of Stonehenge or the Grand Canal in Venice. You are made to feel you are there, moving through these places, looking up at the sky or down at the ground, and pausing to examine more closely a particular stone, boat or building.

Such 3-D walk-through images have been around for awhile; they are used on some real-estate Web sites, for example, to show houses virtually. But Photosynth allows anyone to create them using any standard digital camera, and even using pictures you already possess that weren’t created with Photosynth in mind. You could even use photos of the same site taken by several people. The software will analyze the pictures, figure out which ones overlap and in what order, and then turn those shots that match up into a 3-D synth.

Photosynth, based on technology Microsoft acquired in 2006, is entirely free, and it’s entirely based on the Web, at photosynth.net (where it will be launched at midnight EST Thursday). At that site you can view not only your own synths, but the synths created by every other Photosynth user.

I’ve been testing this service for about a week, and while it has its flaws, I believe that Photosynth offers a dramatic new way to use your photos and to share them with others.

Photosynth works within a Web browser, using a small plug-in you install. Currently, it works only in Windows, using Microsoft’s own Internet Explorer browser or its rival, Firefox. A Macintosh version is in the works, but for now, you can’t even view others’ synths in the Mac operating system.

When Photosynth works right, the results are wonderfully satisfying. But it takes some skill to get a set of photos the service can match up well, a quality Microsoft calls being “synthy.” Ideally, portions of each slice of a 3-D scene should show up in at least three photos, with 50% overlap between them. After you upload your pictures and Photosynth does its best to make them into a 3-D scene, the service assigns them a percentage number that indicates how synthy they were.

In my tests, I tried both collections of photos I already possessed and some I snapped with Photosynth in mind. My pictures of a piazza in Verona, Italy, were only 38% synthy, while ones I took of a hotel room specifically for Photosynth use were 73% synthy.

One gripe I had was that Photosynth doesn’t tell you how synthy your pictures are until after you have uploaded them and waited until the system merges them, a process that can take a long time over a slow Internet connection. It would be much better if the service could tell you in advance how synthy the pictures are. Another objection is that Photosynth has no privacy settings. All your synths are open to viewing by everyone who uses the service.

But, overall, Photosynth is an impressive new way to view and share photos, and an encouraging sign that innovation and creativity still live in Redmond.

Find all of Walt Mossberg’s columns and videos online, free, at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.