Windows XP starts a lot of different services, as engine of the whole Windows system. However, some of them won't be of any use for you! By quitting those unused services, you can realize higher system performances.
We want as few a services running as possible for two reasons. Firstly, you don't want to waste the cpu on services that are never used. Second, the fewer services running, the fewers vunerabilities the system will have. To get a list of services curre