8051 Simulator can use data from hardware ports during simulation. This allows the simulation to interact with real hardware that is connected to the 8051 ports, resulting in a much more realistic simulation. In this mode, a resident kernel program must be downloaded to the board and simulator will communicate with this program during simulation.

First, make sure you have selected "8051 Simulator" and "Use hardware ports in simulation" in project settings.

In your installation directory there should be directory "MicroIDE\Bin\Kernel51" which contains source for the kernel program. Open this project, build it and download to the board.

Once the kernel is successfully downloaded, you can start the simulator with "Step Into" command. Debug tab of the Output window should report that the kernel is detected and print it version:

If the kernel is not detected on the board, the simulator will run in normal mode: