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August 2001
Are Computers Costing Us Money or Saving Us Money?
By John Paul Galles
     It is very difficult in this faster-paced electromagnetic market to stay abreast of the technological innovations that may make your business more competitive and more profitable.
     More often than not, you have learned with technology that at least sticking to one manufacturer – Microsoft – tends to simplify life. Although Microsoft does produce many software offerings in addition to its standard operating system, enhancing the compatibility of its in-house products relative to other manufacturers’ software is a sneaky way to maintain and increase market share.
     Our frustrations are reflected in the actions of antitrust enforcers against Microsoft. While the initial ruling against Microsoft has recently been overturned, Microsoft’s direction has been inalterably changed nevertheless.
     Microsoft has had an extremely savvy marketing approach. In Windows infancy, Microsoft strategically partnered with computer manufacturers to bundle its software onto new computers "free" to the end user. However, this initial benefit to us has now come full-grown and is talking back to us. Hardly a day passes without another twist on the Microsoft monopoly dilemma – the newest being the antitrust enforcers concern about Microsoft’s plan to bundle into Windows XP programs (set to release in less than three months) to play digital music, make Internet phone calls and send instant messages.
     You may not have noticed the market hype over the XP version of Microsoft’s products (XP short for experience, in an effort to steer away from annual dates). While offering the usual improvements in functionality, Microsoft does not play up the most significant aspect of the software – the Product Activation. It’s a moniker for an antipiracy feature built into the software requiring a unique product ID with which to install the program.
     In short, Product Activation ensures that "casual copiers" – who might buy one copy of Windows but install it on two or more PCs – don’t pirate Windows XP. It works by requiring you to "activate" your copy of Windows over the Internet or by phone. Unlike product registration, it is mandatory to activate the product, like product registration it ties a single copy of Windows to a single PC, in this case most effectively. The system generates a unique key based on the Product ID you enter and an unknown algorithm that polls the hardware installed on your system. If you attempt to use that Product ID later to install Windows XP on a different system, activation will fail.
     Prior to antitrust action, Microsoft controlled the distribution and dissemination of its software through manufacturers. As a result of the antitrust action, it is disinclined to continue this arrangement and is instead aggressively enforcing its licensing rights directly. Other software developers cannot complain about that action, it only serves their interests as well.
     There is a lot of controversy at present over Product Activation. There is some concern that if you upgrade your hard disk or other significant component on your computer system and then reinstall Windows XP, the Product Activation will fail because the system will be seen as a different PC. Microsoft assures that you can call toll free, explain the upgrade, and have your system re-activated.
     Unless you’re pirating Microsoft software, Product Activation probably isn’t a big deal. But it should change the way you think about computer usage and how you choose your business’ software products. The East South Central region of the country has one of the highest percentages of piracy at 26.2% or $60 million worth of software. That means that 73.8% is not pirated. To inhibit or halt piracy, software developers will have to begin serious enforcement of licensing agreements.
     As a result, business expenses for software will jump dramatically as you pay for each new software installation and product update. It may prompt you to seek the services of an IT professional to determine which upgrades are most useful and economical at what time. It may also prompt you to more accurately document the hardware and software on your existing systems for analysis.
     One thing is for sure; Product Activation is on both Windows XP and Office XP, and it’s safe to say that future Microsoft products will include it as well as other software developers.
John Paul Galles is the publisher of Greater Charlotte Biz.
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