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When Windows 98 was released, there were still two major shares of the Windows market: Windows 95 still dominated business sectors, Unix systems were running either Red Hat Unix or Novell Netware and customers who wanted NT could either buy Windows NT or Macintosh systems. When hackers discovered more weaknesses in Windows 98 that could be used by attackers against the system, particularly to use them to gain physical access to a computer directly, Microsoft released Windows 98 SE, an expanded version of Windows 98 that added hardware-based provisioning and user authentication technologies to Windows 98. Windows 98 SE re-positioned Windows 98 as a distribution of choice for small businesses in particular, because of its ability to more easily incorporate management and personalization options and because of its component-based configuration. While lacking the ability to support Extensive File System (EF) which was a slightly anticipated feature that Novell's flagship system, the NetWare 4 Advanced Server CE, offered through NDACC3, it was the first version of Windows to implement the WinSock 2.2 API and COM+. This allowed for connection to embedded NetWare servers and an increase of Internet connectivity for Windows programs. This version also introduced \"Windows Millennium Edition\" (WinME), the first operating system to release with the primary focus of a shorter hardware lifecycle. Using a new compositing window architecture, WinME could begin to scale back much of the hard-coded platform compatibility, allowing its users to choose between a legacy Win9x system or the newer WinME and keeping the hard work of compatibility with the Windows NT legacy system already done.

The first major upgrade for Windows and NT was again delivered in Service Pack 1 (SP1) in September 2002. This time it was business customers that criticized the operating system, warning of its poor base of drivers for the new generation of hardware. SP1 featured a massive range of new improvements and additions based on customer feedback, most notably the use of the XP+Driver Framework and its birth from SP2 (SP1 was a compatibility package). Although Microsoft strongly asserted that SP1 was finished months prior to the public release, work was done on SP2 at the last minute on a Saturday and this time it was business customers instead of hackers who damaged the system. The user interface for Windows Explorer and now the File Manager was redesigned as well as advancements in Windows Forms. d2c66b5586