Automatic Private IP Addressing (APIPA)
There is one further feature of DHCP (technically, the DHCP client rather than the DHCP server) that eases administration on small and home networks. Windows 2000 supports a technology known as APIPA, or Automatic Private IP Addressing. If machines running previous versions of Windows were configured to use a DHCP server when one was not available, the machine would be left with a 0.0.0.0 IP address that is Microsofts way of telling you something went wrong and needs resolving. Under Windows 2000, XP and 2003, if a DHCP server is not available Windows will fall back to using APIPA to allow the machine to connect to the network.
APIPA allows Windows to configure automatically itself with a random IP address from an especially reserved range from 169.254.0.1 to 169.254.255.254. When selecting an IP address, Windows checks the local network to make sure it is not already in use. Once an unused IP address is found, Windows keeps it for either as long as necessary or until the next reboot. At the same time Windows continually checks to see if a DHCP server has appeared on the network; if so, it requests a new IP address.
It should be noted that APIPA is expressly intended for use on very small networks of around 20 client machines, due to the manner in which it works. The benefit of APIPA is that it enables administrators of small networks to create quickly a working peer-to-peer network that does not require any administration of each client machines configuration.
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