Appendix A: Installing or Upgrading to Windows XP

How Does Product Activation Work?

In addition to entering a 25-character product key, Microsoft now requires you to activate your copy of Windows. Microsoft requires product activation for Windows XP, Office 2002, and Visio 2002. Windows XP allows you 30 days of use before requiring activation. Office 2002 allows you to run the program 50 times, and Visio lets you run it a mere 10 times before requiring product activation. When the 30 days expires, if you haven't activated Windows, it won't let you log on until you activate it. How does activation work?

Many of the components inside any computer have unique serial numbers that are routinely read by the operating system. The Windows Setup Wizard collects data about the hardware components of your computer as it installs drivers for the hardware you have installed in your system. It then creates an individually identifiable activation ID that it applies to your computer. When you activate Windows XP, Windows sends your activation ID to Microsoft's databank, where the information is stored, and Microsoft's activation server "unlocks" (activates) your copy of Windows. (If your computer isn't on the Internet, you need to call Microsoft on the phone to send your activation ID.) Each time you reinstall Windows XP, you must reactivate it, and Microsoft checks that the activation ID hasn't changed.

Product activation does not limit the number of times you can reinstall Windows XP on a single machine.

You can't install the same copy of Windows XP on several different computers, because they have different hardware serial numbers. If you try, when the activation ID is checked against your original activation ID, they won't match, so Microsoft won't allow you to activate Windows XP. This is how Microsoft's product activation prevents casual piracy. For example, if you forget about activation and loan your copy of Windows XP to a friend, when he installs it on his computer it will create a different activation ID. The problems will begin when your friend tries to activate Windows on his computer and this new activation ID does not match the activation ID of the previously installed version. Even after Windows is activated, you can run into trouble, because Windows periodically checks the activation ID with the activation servers at Microsoft. (Yes, your computer will periodically report to Microsoft's activation servers, and no, you will not be asked permission beforehand.)

The activation ID cannot be decoded to point directly to a particular machine, so Microsoft can't figure out (using only your activation information) who you are or what your are doing with your computer. However, future efforts could conceivably reveal a way to exploit the information about your computer that is contained in the activation ID. Even though your machine may not be able to call direct attention to you, it may draw unwanted attention to itself, which will invariably inconvenience you in some fashion.

What happens if you reinstall Windows on what appears to be a different computer? At the time of this writing, replacing more than three hardware components in your machine causes the software to require reactivation. Once this happens, you will have from 3 to 30 days to call Microsoft to get permission to continue to use the product. If you cannot activate the product by then, you will not able to log on to Windows. You can call Microsoft to explain what has happened so that you can get your product activated.

The activation scheme appears to allow you to upgrade up to three hardware components at the same time without deciding that you have moved it to a different computer. After your new hardware has been installed for a while, the activation system automatically updates your activation ID to reflect your new hardware, and transmits that to Microsoft's activation server. You can then replace additional hardware, without fear of exceeding the three-device limit. Our conclusion: Don't plan on installing too many (more than three) new components at the same time.

The Future of Product Activation Microsoft is conscious of the fact that customers will intensely dislike this new procedure. By the time you read this, Microsoft may have already put in place a new activation scheme, because some folks in Germany found a way to circumvent the present system. (The Windows Automatic Update system allows Microsoft to update Windows features, even after the program is released, so the activation scheme can be updated even after you install Windows.) We expect Microsoft to retain some of the identification and data-collection methods described here, but also to give the reaction of its customers some consideration. For the latest information on product activation or any other Windows XP-related news, check our Web site at http://net.gurus.com/winxptcr. If you would like to read more about this from the creator's point of view, read the "Microsoft's Piracy Basics: Product Activation" Web page at http://www.microsoft.com/piracy/basics/xp_activation.asp.