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Tell me is it possible to run two instances of emulator on the same machine. I am doing some networking app and need two emulators to test it?

Answer:

You can not launch two instances from the Phone tools. You can launch a second instance from command line.
c:\Program Files (x86)\Microsoft XDE\1.0\XDE.exe" "C:\Program Files (x86)\Microsoft SDKs\WindowsPhone\v7.0\Emulation\Images\WM70C1.bin"

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