Microsoft consolidated the Windows Platform when they brought out Windows XP. They finally discontinued the Windows 95/98/Me product line, standardizing the Windows user interface. What they should have done is to bring out a single unified version of Windows.
What they chose to do is to bring out separate Home and Professional versions. Up to this point, any version of Windows could attach to any common type of file server and each had no significant built-in limitations. Now, the Home version lacks the ability to attach to many high-end servers such as Novell Netware and Windows 2003 platforms. It should be noted that Microsoft had to go out of their way to build in these limitations.
Windows XP Home does have sufficient network smarts to cruise the internet and set up small peer to peer networks. If you set up a network of nothing but Windows XP Home computers however, you may run into an arbitrary wall of five concurrent network connections. Again this is something Microsoft built in to push larger companies into the Windows XP Professional product.
This brings us to the basic reason behind the two XP versions. Marketing theory dictates that if you bring out two versions of a product, at two distinct price levels you will make more money. You price the first product more economically and point to it for people that are price conscious. Then you point out the more powerful version and its strong points. Many people will buy the more expensive product whether they really need it or not.
For many business users XP Home is just fine, for others, Professional is required. Make sure you know which one you need before purchasing a new computer, since almost all computers at the Business Depot and Future Shop and such come with Windows XP Home.
Some computer companies do offer XP Professional as an option. Some do not offer it at all. In this case you would need to purchase an XP Professional upgrade which costs about $300. This is obviously not the recommended route to go. Microsoft does not seem to offer an XP Home to XP Professional low cost upgrade product for some equally obscure Marketing reason.
You can set up a home or small business network with up to five XP Home computers without a problem. You can network even more as long as no one XP Home computer supports more than 5 shared network resources. If one XP Home computer serves as either a file server or a print server, only five other computers can attach to it.
One way around this arbitrary Microsoft network limitation is to use a Windows XP Professional computer as the file or print server. Windows 98, as well, has no such network connection limitations and could serve as an adequate peer to peer server.
If you are buying a laptop and intend to use it both at home and at work you should check with your company’s network administrator to confirm the version of Windows that they would recommend. If you know you have a Novell Netware or Windows 2003 server that you need to attach to, then be sure and order the computer with Windows XP Professional.