Laptop users often experience problems when they move their machines between networks in which DHCP servers aren’t consistently used (e.g., moving between an office that uses DHCP to assign IP addresses and a home network that uses static IP addresses).

If you configure your computer to use DHCP and no DHCP server is available, the machine will typically use an IP address in the range 169.254.0.1 to 169.254.255.254 with a subnet mask of 255.255.0.0.

The actual IP address will depend on what IP addresses other machines on the local subnet have selected (XP will perform a limited test to ensure the Windows TCP/IP component doesn’t use an address already in use).
Because the local TCP/IP stack assigns no WINS, DHCP, or gateway information, all IP communication is limited to machines in the local subnet.

XP will let you create an alternative IP configuration that you can use when your system cannot find a DHCP server.
This alternative configuration lets you specify an IP address, subnet, gateway, and the other typical network settings.

To create this alternative IP configuration, perform the following steps:

1. Open the Control Panel Network Connections applet (go to Start, Programs, Accessories, Communications and click Network Connections).
2. Right-click the network adapter for which you want to specify an alternate IP configuration, then click Properties.
3. Select Internet Protocol (TCP/IP), then click Properties.
4. Under the General tab, ensure that you’ve configured the connection to use DHCP.
   The Alternate Configuration tab will not be shown otherwise.
5. Select the Alternate Configuration tab, select "User configured", then fill in the static IP address details you want the connection to use when the system cannot find a DHCP server.
6. Click OK.
7. Click OK again to close all remaining windows.

XP stores the custom connection configuration settings under the HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\Tcpip\Parameters\Interfaces registry subkey.