Software piracy is a worldwide problem which negatively impacts software developers, resellers, support professionals, and most importantly, consumers. One form of piracy, estimated to be as high as 50%, is known as casual copying. Casual copying is the sharing and installation of software on multiple PCs in violation of the software's end user license agreement (EULA). Microsoft has developed product activation as one solution to reduce this form of piracy.

Product activation uses several methods and technologies to help achieve Microsoft's goals of protecting intellectual property rights by making it easy for users to comply with the terms of the EULA and reducing software piracy.

In order to help customers and partners better understand the technologies used by product activation, and their unobtrusive and anonymous nature, we will outline in this bulletin:

1. How activation works for Windows XP acquired through:

1a. A PC manufacturer (OEM)

1b. A retail store (where customers buy "boxed" software product)

1c. A volume licensing agreement (customers who acquire their licenses through programs such as Microsoft Open, Enterprise, or Select licensing).

2. How the hardware hash component of the installation ID is created and the scenarios in which a copy of Windows XP may have to be re-activated due to a substantial hardware modification.

For a more general overview on the basics of product activation please see Additionally, this document contains some technical concepts. Pointers to reference material covering certain technical concepts are included in the appendix. Information contained in this document represents product activation in Windows XP as of the document's date of publication.