As a support technician for a major PC manufacturer, customers frequently ask me to outline the basics of Microsoft’s latest antipiracy effort, Product Activation. They want to know if it will affect the software they can install, if it will prevent future hardware upgrades, and above all else they want to know how it will affect their privacy. As the popularity of Windows XP and Office XP grows, you may have some of these questions posed to you. To help you explain the basics of Product Activation, I’ve compiled 10 of the questions I am asked most frequently and the answers I give to those questions.

How does Product Activation work?
Product Activation is currently required for all OEM and retail versions of Windows XP, Office XP, and several other Microsoft products. Product Activation isn’t required on licenses acquired through one of Microsoft’s volume licensing agreements. So agreements such as Microsoft Open License, Enterprise Agreement, or Select License, will not require activation. Click here for a complete list of products from Microsoft’s Web site.

During the installation process, you must enter the product key associated with the particular copy of the software. After you enter this product key and accept the end user license agreement (EULA), you’ll be prompted to activate the software (Figure A). You can choose to activate the software now or later. Once you’ve chosen to activate the software, you must opt to do so over the Internet or via the phone.

Figure A
The Product Activation screen for Windows XP

During the activation process, an algorithm uses the software’s product key and information about the machine’s hardware to create a 50-digit installation ID. For a very detailed description of how the installation ID is created, check out this paper from Fully Licensed GmbH, a German copy-protection company.

The Installation ID is then transmitted to Microsoft via the Internet or by you, over the phone. A confirmation ID will be either sent back to you via the Internet or given to you while you’re on the phone. Once you enter the confirmation ID, the activation process is complete.

Frequently asked questions
Now that you know how Product Activation works, let’s take a look at the 10 questions end users ask me most frequently.

1. What data does Microsoft gather during activation?
The only information transmitted to Microsoft during activation is the installation ID and, for Office XP and Visio 2002, the name of the country in which the product is being installed. What about the hardware information used to create the installation ID? According to Microsoft, once the installation ID has been created, there is no way to use this ID to determine the computer’s hardware configuration.

2. Will the product work without being activated?
Yes, but only for a short time. The Office XP family of products can be launched 50 times before activation is required, and Visio 2002 can be launched 10 times. The grace period for Windows to be activated is 30 days from first boot or upgrade; beta versions require activation in 14 days.

3. Can I use my software after the grace period without activating it?
No. Once the grace periods have expired, Office XP and Visio 2002 will go into what’s known as “reduced functionality mode” (see question four) and Windows XP will cease to function except for allowing the user to activate the software.

4. What is “reduced functionality mode” and what products does it pertain to?
Office XP and Visio 2002 will go into “reduced functionality mode” if the user doesn’t activate before the end of the grace period. In this mode, users will not be able to save changes to documents or create new documents, and additional functionality may be reduced. Existing files won’t be altered. You can edit or save them once you activate your version of Office XP or Visio 2002. Users will regain full functionality after the software is activated.

5. Will I have to reactivate my copy of Windows XP if I upgrade my hardware?
Unfortunately the only answer to this question is maybe. Microsoft states that changing some hardware items after activation will cause your activation to be invalid and require reactivation. Microsoft doesn’t detail which hardware items are involved, but according to the white paper by Fully Licensed, the following components are all used to compute the installation ID:

  • Hard drive’s volume serial number
  • Network card’s MAC address
  • CD-ROM drive identification string
  • Graphics card identification string
  • CPU serial number string
  • Hard drive hard identification string
  • SCSI host adapter hardware identification string
  • IDE controller hardware identification string
  • CPU processor model string
  • RAM size
  • Whether the computer is able to be docked

So just how many of these components do you have to upgrade to require reactivation? Microsoft says that if you “overhaul your computer by replacing a substantial number of hardware components, it may appear to be a different PC and you will have to reactivate.” It, however, has not made entirely clear what it considers “substantial.”

Microsoft does state that “common changes to hardware such as upgrading a video card, adding a second hard disk drive, adding RAM, or upgrading a CD-ROM device will not require the system to be reactivated. The changes are cumulative; however, if a user is asked to reactivate, the hardware profile is reset to that new configuration.”

6. Is reactivation required if the software is reinstalled?
You may have to reactivate the software if you reinstall it. The same versions of software can be reinstalled on the same machine as long as the hard drive isn’t reformatted. If the hard drive is reformatted, reactivation is required.

More information on Microsoft’s Product Activation

To read more about Product Activation, check out these sites:

7. Must I reactivate my software if I reformat my hard drive?
As mentioned in question five, reformatting the hard drive will require reactivation. Luckily, the same grace periods apply for this reactivation as applied to the original activation. Also, reactivation can be completed as many times as necessary on the same computer.

8. Will I have to reactivate if I run the Windows XP Recovery Console from the Windows XP Installation CD?
Thankfully, the answer to this is no. Use of the Windows XP Recovery Console will not invalidate your activation and cause you to reactivate your product.

9. Can I install the software on both my laptop and PC?
Some Microsoft EULAs do allow the primary user of a product to install one additional copy of that product on their laptop computer for their exclusive use. This however, does not apply to OEM licenses obtained with the purchase of many new computers. Such licenses are single-use licenses and cannot be transferred to another PC.

10. Once I activate my product, then what?
Once the product is activated, the user will have full functionality of the software. Periodically the software does check to see if it is activated and if it is still installed on the same computer on which it was originally activated. If the product detects that it isn’t activated or that it is on a different computer than on which it was originally activated, the product will cease to fully function and reactivation will be required.