Windows XP supports the industry standard power management technology known as the Advanced Configuration and Power Interface (ACPI), which enables the operating system to control power to your computer and peripheral devices.
First, lets tackle what Hibernate does. Hibernate saves an image of your desktop with all open files and documents, and then it powers down your computer. When you turn on power, your files and documents are open on your desktop exactly as you left them.
In contrast, standby reduces the power consumption of your computer by cutting power to hardware components you are not using. Standby can cut power to peripheral devices, your monitor, even your hard drive, but maintains power to your computer's memory so you don't lose your work.
But where is Hibernate when you click the Start -> Turn Off Computer button?
If you are using Windows XP Home Edition, or Windows XP Professional, the Shut Down menu will present the options to Stand By, Turn Off, or Restart your computer.
Hold down the Shift key, and the Stand By button will magically change to Hibernate. Click that and you're done!
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