VSJ – Feb 2002 – Work in Progress

Ken Haynes FIAP has been involved in systems design and development for PCs for 21 years. He is currently developing in Dephi 6. Here, he writes about Microsoft’s Product Activation system and asks, ‘Is it a passing phase or a future standard?’

Windows XP is arguably the most significant release of Windows since Windows 95, but will Product Activation deter new users?

What is Product activation and how does it work?

Product Activation (PA) is the latest weapon from Microsoft in its war against software piracy. Many new Microsoft products including Windows XP and Office XP have this feature incorporated into their set-up processes. The concept of PA is a simple one. It prevents products from being used on more personal computers than is intended by the software’s licence. Most software installations require a Product Key (sometimes called a serial or licence number) to be entered during the installation phase. PA takes this key and transforms it into an Installation ID. The Installation ID is derived in part from the Product Key but – most controversially – also from a checksum derived from the configuration of the PC itself, thus providing a unique reference to that particular machine.

The Installation ID is then given to Microsoft, either automatically via the Internet or manually by contacting Microsoft on a freephone number (initially available 24 hours a day in most regions). Microsoft then provides the user with a Confirmation ID that is used to activate the product. Initially, you will have 30 days in which you can use the product without activating it. No personal information is sent to Microsoft during the PA process, as product registration is a separate issue.

Why the fuss?

PA is a simple operation and seamless via the Internet, so why the big fuss? The problem lies in the fact that if the configuration of the computer on which the software is installed changes significantly, as will occur when expansion cards are added or removed, the product “thinks” that it is not on the computer on which it was originally installed. So it requires reactivation.

At first glance, this seems to be an unthinkable imposition to place on the end-user. In reality however, the number of hardware changes needed to cause reactivation to be required appears to be between four and six. Should you be in the position of having to reactivate your software, according to Microsoft, you will be allowed four activations without having to telephone them. It seems that the real problem will be for those people in the business of evaluating or reviewing hardware for whom constant hardware / configuration changes are a necessity. For most home users, should activation be required, it will be nothing more than a minor inconvenience.

Why the need for Product Activation?

Corporate users who participate in a volume licensing agreement with Microsoft will not be required to activate their products. Microsoft’s main concern is casual copying, as they call it, which, by and large, is more of a problem in the domestic market.

According to last year’s BSA Software Piracy Report, it is estimated that in the year 2000 software piracy cost the computer industry almost $12 billion (£8.3 billion). The software industry has to absorb this loss. As a result there are fewer jobs, less research and development and higher costs to consumers than would otherwise be the case.


Many anti-software piracy methods have been tried over the years without much success. The main reason for the failure of most of the systems was the potential inconvenience to end-users. People were simply not prepared to tolerate such high levels of “policing” and the subsequent inconvenience. Microsoft appears to have struck a fair balance between protecting its interests and the needs of the end-user. I believe PA will become a fact of life in Microsoft products and I am sure it will not be long before other software vendors follow with similar methodologies.

As for the take-up of Windows XP, I can’t see there being a significant reduction in the number of copies being sold owing to the incorporation of PA once people understand the mechanism behind it. Let’s face it, sooner or later, most personal computer users will be using it, whether they like it or not.

Interesting project or development? Let us know at eo@iap.org.uk!

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