Much like iPhone OS, Windows Phone 7 Series is not supposed to support multi-tasking. Only native applications will be able to multi-task at all. Despite this, PocketNow reports that a 3rd party video player manages to handle multi-tasking in the Windows Phone 7 Series emulator. They've posted a video up to prove it.
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What does this mean? It is possible that the creator of this app simply managed to trick the phone into believing his app was a native application. That, or Microsoft has been hiding a very cool feature from us for some indecipherable reason.