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Microsoft Product Activation

Updated: August 13, 2001

Microsoft Corp. is committed to the protection of intellectual property rights and to the reduction of software piracy worldwide. Product Activation technology is being included in Microsoft® Office XP, Visio® 2002 drawing and diagramming software, and Windows® XP operating system. This technology is aimed at reducing software piracy (the number of illegal copies of a product) as well as ensuring that Microsoft's customers are receiving the product quality that they expect.

The goal of Product Activation is to reduce a form of piracy known as "casual copying" or "softlifting." Casual copying is the sharing of software between people in a way that infringes on the software's end user license agreement (EULA). An example of casual copying is if someone were to obtain a copy of Office XP and load it on his or her PC, then share it with a second person who loaded it on his or her PC, then share it with a third person who loaded it on his or her PC, and so on. This form of piracy is prevalent and has been estimated by some industry trade groups to account for a staggering 50 percent of the economic losses due to piracy. Worldwide, the piracy rate is estimated to be 37 percent; in other words, one out of every three software products in the market is pirated.

There are other forms of piracy as well such as counterfeiting, hard disk loading and Internet pirating. Although product activation will have an impact on those types of piracy, Microsoft has other initiatives to reduce piracy in those areas.

Over time, reduced piracy means that the software industry can invest more in product development, quality and support. This ensures better products and more innovation for customers. Ultimately, customers will benefit from the economic impact of reduced piracy through increased job opportunities and higher wages. Customers will also receive the best value for their software investment by being able to receive updates and other product information.

On This Page

How Activation Works
Product Activation Fast Facts
Top 10 Myths About Product Activation

How Activation Works

Those who acquire software licenses through one of Microsoft's volume licensing programs will not be required to activate those licenses. Microsoft understands the unique deployment requirements of businesses that need to acquire licenses in volume and provides product that does not require activation to those customers. Qualifying as a volume licensing customer is easier than many may think. Customers can qualify for Microsoft's Open Licensing program by purchasing as few as five licenses. More information on Microsoft Open Licensing and Microsoft's other volume licensing programs can be found at the business licensing Web site.

Software acquired as packaged product will require activation. Software acquired on new PCs sold by OEMs will also require activation; however, the software may be activated by the OEM at the factory before delivery to the end user.

Customers required to activate their software must complete a simple, straightforward and anonymous activation process that takes less than one minute when completed over the Internet. Activation can also be completed by telephoning Microsoft and speaking with a customer service representative. If activation is completed via the Internet, the product will take care of most of the work and will require very little user participation. If activation is completed by telephoning Microsoft, a customer service representative will assist with the activation.

To make activation convenient, the products do not require activation immediately after installation. Office XP and its components will allow up to 50 launches before requiring activation. Visio 2002 will allow up to 10 launches before requiring activation. Windows XP will allow 30 days from first boot before requiring activation.

Activation is not product registration. The only information required to activate is an Installation ID created by the software and, for Office XP and Visio 2002, the country in which the software is being installed. No personally identifiable information is required to activate. A diagram of the activation process is below.

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Once activation is completed, most users will never have to activate their installation again.

Product Activation Fast Facts

  • Customers who acquire their licenses through one of Microsoft's volume licensing programs will not be required to activate those licenses.

  • Microsoft Product Activation is entirely software based and requires no hardware dongles, floppy diskettes or other external tools.

  • Microsoft Product Activation is easy for users to accomplish and for many users will only be required once for the life of the product (some users may have to activate again if they move the software from one PC to another or upgrade a significant number of components within their PC).

  • Activation is completely anonymous and requires no personally identifiable information from the end user.

  • Activation requires each instance of a product installation to be activated with Microsoft.

  • A unique Product Key is required for each installation.

    Customers may activate the product via one of two methods:

    • Internet. Microsoft servers process the activation and silently activate the product.

    • Telephone. Customer service representatives process activations and exceptions.

  • Activation call centers for telephone activations are located regionally worldwide.

  • Customer service representatives provide local language support.

Mandatory Product Activation Data

  • The Installation ID is unique to each product and comprises two components:

    • Product ID. Unique to the product key used during installation

    • Hardware hash. Nonunique representation of the PC

  • The country in which the product is being installed (for Office XP and Visio 2002 only)

Voluntary Product Registration Data

  • Name, company name and address

  • Phone and e-mail

Top 10 Myths About Product Activation

Product activation will hamper corporate customers' deployment of software.

Actually, corporate customers should only be minimally impacted, if at all. Licenses acquired by customers through one of Microsoft's volume licensing programs will not require activation.

Product activation is an invasion of privacy.

Microsoft absolutely respects the privacy of its customers and does not ask for any personally identifiable information to activate a product. Product Activation is completely anonymous.

So it's anonymous, but you are still requiring information about the make and model of my PC.

To ensure the end user's privacy, Microsoft uses a one-way mathematical algorithm to create the hardware hash used by Product Activation to create the Installation ID. Once created, the hash information cannot be calculated back to its original values. Hardware information is sent through the algorithm in the software on the PC — not at Microsoft — to create the hash. The raw hardware information is not known or sent to Microsoft. Ensuring end user privacy is a

No. 1 design goal for Microsoft with Product Activation.

Users must have Internet connectivity to activate.

Product Activation provides two methods to activate: Internet and telephone. The Internet method requires that the PC be able to make a connection to the Internet. The telephone method requires the user to provide information to a customer service representative over the telephone.

Counterfeiters are the real piracy problem.

Software piracy comes in many different forms, some more widely known than others. Each type of piracy is unique and often requires unique protection methods. Counterfeiting is a common form of piracy. Others include hard disk loading, Internet pirating and casual copying, or softlifting. Casual copying is the sharing of software between people in a way that infringes on the software's EULA. An example of casual copying is if someone were to get a copy of Office XP and load it on his or her PC, then share it with a second person who loaded it on his or her PC, then share it with a third person who loaded it on his or her PC, and so on. This form of piracy is very prevalent and has been estimated by some industry trade groups to account for a staggering 50 percent of the economic losses due to piracy. It is this form of piracy, casual copying, that Microsoft is primarily looking to reduce with Product Activation.

Microsoft is addressing the other forms of piracy with other initiatives such as Certificates of Authenticity (COA) that accompany new PCs with genuine licenses, edge-to-edge holograms, educational campaigns and, as needed, enforcement efforts.

Activation is difficult to complete.

Product Activation is actually very simple to complete. It requires just a few mouse clicks for those with Internet connectivity. For those who must activate over the telephone, the process with a customer service representative can be completed in just a couple of minutes. Most users' response is "that's it?"

Product Activation keeps users from changing or upgrading their hardware.

Not true at all. Users can change or upgrade their hardware. One of the forms of piracy that Product Activation guards against is hard disk imaging. Not all forms of hard disk imaging are illegal. In the case where a pirate copies data from one PC hard drive to another to illegally run the software on two PCs, Product Activation stops that by forcing the copied software to be reactivated. It does so by comparing the hardware on which it was activated to the hardware on which it is now being booted. If the hardware is substantially different, then reactivation is required. If it is the same or similar, then the software will continue to work. Those who upgrade their PC's hardware substantially may be asked to reactivate. Reactivation for this reason is easy and can be completed by contacting Microsoft to obtain another confirmation ID.

Product Activation changes the way Microsoft software is licensed.

The underlying principles of Microsoft's software licenses have not changed. Microsoft's end user license agreements have always stipulated the number of PCs that software can be installed on. Product Activation does not change that.

Product Activation has already been cracked, or at least it will be cracked very quickly, and therefore is of no anti-piracy benefit.

Actually, Product Activation has yet to be cracked. The so-called "crack" now being passed around the Internet contains a set of instructions for setting a registry key that disables activation. Microsoft made the existence of this registry key public to its technical beta testers back in early February telling them where it was and how to set it to disable activation, and included it as a testing tool.

Still, the intellectual property protection arena is a cat-and-mouse game. All intellectual property protection technologies will be cracked at some point — it's just a matter of time. The measure of success is not completely stopping software piracy, which is probably an unattainable goal. Success is more likely to be measured in increased awareness of the terms of the license agreement and increased license compliance.

Internet Explorer and Windows 2000 will begin requiring activation as well.

Not true. Internet Explorer 6 does not require activation or activation of the operating system it has been installed on. Some Internet reports have suggested that; however, the registry key detailed in those reports is created by a separate software installation. The registry key is created by the installation of the Terminal Services client software and a connection to a Windows 2000 terminal server; it facilitates the licensing of Terminal Services.

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