"Originally posted by http://www.computerbits.com/archive/...taedt0110.html
October 2001 Volume 11 - Number 10

Network Community

Windows XP product activation: part 3 ... by Ted Mittelstaedt

Last month was part 2 of my series on the Microsoft Windows Product Activation (WPA) scheme, the new
serialization scheme from Microsoft that will be on the retail versions of Windows XP. In it I
overviewed the scheme and mentioned some of the myths and some of the real reasons for it.
<sniped>
I hinted last month that Microsoft has some serious reasons for pushing WPA that are unrelated to
getting a few pirate businesses to clean up their act. You won't see the reasons discussed most
places because Microsoft is scared to death of their getting out.

Damage Control

In a nutshell, WPA is a response to the finding of the anti-trust trial. One of the central problems
with the trial, from Microsoft's point of view, is the finding of fact that Microsoft is now a
monopoly. The appeals court upheld this finding. From Microsoft's viewpoint, the damage this has
wrought is far worse than even breaking up the company. Now every government of any country in which
they do business is legally justified to regulate them. And this regulation is coming with lightning
speed.
Microsoft knows that they cannot get this finding of fact dismissed right now, but it's certainly
possible in the future. Monopolies usually are deliberately broken up specifically to create
companies that are notmonopolies. So, now one of the central goals of the Microsoft corporation is
doing whatever is necessary to prove at some time in the future that they are no longer a monopoly.
In short, they must lose market share.

Have Cake, Eat It Too

Now, the key to understanding this is to understand that they need only prove they aren't a
monopoly: there's no stipulation that they must prove that they don't make most of the money in the
software market! Their goal is to seek out exactly how to have their cake and eat it too. So they
want to split the operating system market right down the middle, 50-50.
On one side of the market are all the businesses that have money, who don't want to pirate, as well
as all the honest home users who pay for their software. On the other side are all the greasy kids
who trade crack among themselves, and all of the slime businesses that don't pay for the copies of
software that they use. As long as Microsoft only has 50% of all customers, numerically speaking,
it's perfectly fine from the courts' point of view if the 50% who are not are all folks who don't
pay their bills!
Microsoft knows what their sales figures are, and they know how big the PC market is. On one hand
the courts are telling them that they are a monopoly and everyone runs their software. On the other
hand their own sales figures that tell them that they have sold nowhere near as many copies of
Windows as there are PCs in the market. It must be immensely frustrating to them: they are being
punished for a bunch of people ripping off their software. At the least this must stop! If indeed
90% of all computers out there do run Windows, then by gum they better have sold an equivalent
number of copies!

Redefinition

So the answer is obvious: redefine Windows customers in the software market as paying customers.
They will then make the argument that everyone who isn't a paying customer of Windows must be
running a competitive operating system. (if they are stealing the OS they are effectively not in the
market to be counted, as they are not customers of anyone).
All that's left then is picking some figure that the court agrees with from the various research and
survey groups as to the total number of PC computers installed, then subtracting the paying Windows
customer figures that they get from the site licensing program, and from the WPA program. The number
left over is the number of installations they will argue are not running Windows.
Consider: Microsoft already says in their WPA FAQ that in 2000, 12 billion dollars were lost to
piracy. Microsoft knows that they are never going to get any money out of those pirates -- these are
scum who have proven that they won't ever pay for anything and they will just find a way around it.
So, if you can't get money out of them, then you make lemonade. You claim that since this 12 billion
dollar group has never purchased Windows, then they must all be running Linux. If you can make such
a claim stick, then you can fundamentally damage the reasoning that was used to declare you a
monopoly.

Make It Stick

WPA serialization is what will make that stick. It's a flawless argument because if the opposition
proves that this 12 billion dollar group is actually running your product, then you can simply claim
that it's impossible because they never paid for an activation key.
If that argument fails, then you can ditch it by claiming that if they are Windows users, they still
aren't customers since they aren't paying, and thus don't count in the market percentage
calculation. It's an argument that should help Microsoft immensely. Even if invalidated there's no
way for the opposition to make use of it. Getting serialization counts from WPA and site licenses is
integral to this argument.
This reason is legally fascinating. But it and the reasons for trying to force this onto the market
I mentioned last month are dwarfed by the giant reason of them all, and that's the ability to sunset
software.

.................Continued below due to length.