A NIC {network interface card} and networking software is placed in each computer. A cable is attached to this NIC at one end and connected to a Hub at the other. The Hub is just a box that combines the signals from each NIC so that all the computers can transfer data.

The simplist form of LAN is a Peer-to-Peer Network. Windows 95 networking is a good example of this. There is no need for a dedicated server. Any computer on the network can be configured to share files or resources such as printers. In the example above, two PCs have printers connected to them, but every PC on the network can use any of the printers. This can save a lot of money because each computer does not need it's own printer and users don't have to save files to a disk and move to a PC that does have a printer.

A more involved type of LAN is a Client-Server Network. Windows NT and Novell are examples of this. The hardware is the same as in the Peer-Peer network but the software has provisions for controlling access to files and programs. Organizations that require tighter security use this type of network.