However, Windows XP had another trick up its sleeve, in the shape of its Program Compatibility Mode, a function first seen in the Windows 2000 Service Pack 2, but rather more versatile in its latest incarnation. Older applications stood a rather better chance of running under Windows XP than hardware, but it was still a bit of a lottery - some were found to work perfectly well, while others crashed, or even refused to run at all. Many people upgraded their PCs to Windows XP immediately it was released and discovered the hard way that some peripherals (particularly soundcards, scanners, and printers) simply didn't work at all, and either returned to their previous version of Windows, or rushed out to buy replacement hardware that did work. To be supported under any new operating system, hardware nearly always needs new drivers, so it's extremely important to wait until these have been written before installing Windows XP.
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However, this compatibility mainly applied to the most popular third-party products, including (naturally) Microsoft's own range, leaving a huge number of other software applications and hardware peripherals in limbo.
When Windows XP was first released, it was already compatible with a wide range of hardware and software applications, largely because Microsoft and various third-party developers had been working together to ensure the widest possible customer uptake of the OS. Do you have elderly Windows or MS-DOS software that refuses to run under Windows XP? If so, there may still be a way to get it working.