Microsoft bashers are having a field day with the news that upcoming versions of Windows XP and Office XP will require a separate activation step. Users who purchase retail versions of these products will see an extra dialog box at setup time, after they type in the 25-digit product ID. With a brief Internet connection, they’ll have to verify that the product ID matches the hardware it was first installed on.

Critics are hopping mad, and online discussions are abuzz with outraged users who say they’ll stick with older Windows and Office versions or even switch to Linux rather than deal with what they consider unwarranted restrictions on their right to use software.

Much of what you read in sensationalist articles and online discussions is pure FUD: fear, uncertainty, and doubt—Microsoft’s traditional marketing tactics turned against it. In last week’s column, I focused on common misperceptions about product activation. For instance, contrary to what some reporters have written, you’ll be able to reinstall Windows and Office an unlimited number of times on the same machine, without hassles, and you won’t need Microsoft’s permission to upgrade your hard drive. But buried deep inside that mountain of FUD are some serious issues that IT pros and end users will need to consider. I’ve culled five such issues from the tremendous number of responses to this Microsoft Challenge.

Issue #1: No one knows whether Microsoft can handle all those product activation requests
An anonymous TechRepublic member wrote: “My company has always paid for every copy of Windows and Office. That’s not the issue. What matters is ‘uptime.’ Microsoft won’t be able to make this product activation scheme bug-free, and I’m concerned that some small glitch in the product activation database will cause PCs, or parts thereof, to stop working.”

I share those concerns, especially in light of the catastrophic server outages that knocked Microsoft offline for two days in January. Microsoft Product Manager Kristian Gyorkos told me that the company is building its activation systems to handle a “worst-case scenario,” with enough capacity to handle the load even if every purchaser of every retail copy were to hit the activation servers simultaneously. Sounds good, but until the product is available, no one will know how well those systems will work.

Issue #2: Your privacy may not be assured
Microsoft’s product activation fact sheet emphasizes the company’s commitment to personal privacy. TechRepublic member terrykt spun this extremely believable tale: “Microsoft’s great registration server in the sky will eventually have the unique processor number for everyone in the world that has a Microsoft product. Now that’s something I’d like to have! I know! I know! They say they won’t be keeping any more information than the processor number and the registration code, BUT how many times have we heard that from various ‘information gatherers’ over the last few years, only to find out later that they had a different agenda? Remember, ‘Just because you’re paranoid doesn’t mean they’re not really out to gitcha.'”

Issue #3: Honest but disorganized Windows users are going to suffer
Member Jon P asked, “How are network admins who wish to deploy several OSs at once ever going to keep track of which activation code goes with which PC? I don’t think Microsoft thought this out too carefully.” For users with Open or Select license packages, of course, this is a nonissue, but it’s a very real concern for small businesses where management is unwilling to commit to a licensing program and instead tosses all the CDs in a drawer.

Issue #4: This could be the beginning of a forced march to subscription-based licensing
Microsoft swears that it will support Windows and Office XP users “in perpetuity.” But TechRepublic member R. Kinner said he’s not convinced that the same commitment will extend to future versions of Microsoft software: “I am more concerned that future versions will be released as time-limited software. You register your package and the clock starts. A year from now, you need to reregister—for home office/personal users, a credit card is needed to reactivate the software. Corporate users would probably be able to administer the renewal via a LAN. This gets away from the upgrade business and on to the lease business plan for income.” With Office XP, Microsoft is already offering a subscription option. It’s reasonable to fear that that option might someday turn into the only way to buy.

Issue #5: The price is just too high
In effect, product activation amounts to a de facto price increase for home users with multiple PCs who’ve grown accustomed to upgrading two or three machines from a single CD. At $90 a pop, that’s serious inflation. Member jeffs admitted, “I have mixed feelings. Microsoft is just trying to protect its software from piracy, but isn’t this getting to the point of being greedy? Novell has been doing this for a couple of years, but it doesn’t sell a workstation/desktop OS either. It will be interesting to see if MS jacks up the price of this new OS and requires activation.”

A correction to last week’s column: When you install Windows XP from a retail CD, you’ll have 30 days to contact Microsoft to get an activation code. When you install Office XP, you’ll be limited to 50 startups, which may take more or less than 30 days.

Next week: You tell Microsoft what it really needs to do with product activation.
We look forward to getting your input on Microsoft product activation. Join the discussion below or send the editor an e-mail.