Windows' Genuine 'Crack'
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Microsoft is getting high on its anti-piracy drug, and some customers are paying for it. |
Microsoft's explanation for the weekend's Vista "validation" failure is a troublesome but revealing indication of this trend and shows a corporate unwillingness to admit weaknesses in the Windows Genuine Advantage program.
The signs? Semantics and Microsoft's general attitude of denial and justification with respect to WGA. The denial and justification make sense, because it's questionable how much the program is in the best interests of Microsoft customers and partners. So, Microsoft executives have to justify WGA to themselves, and they do that in part by denying its negative impact or its shortcomings.
Something else: They're hooked on WGA. It's some Windows executives' new drug—"Crack"—of choice, because of the potential financial boon they see coming from the anti-piracy mechanism and program.
I sympathize with Microsoft's desire to get properly paid for Windows and to protect customers from counterfeit software backloaded with malware or RATs (remote access Trojans). But those objectives don't mean that WGA is the best mechanism, nor should its validation shortcomings be ignored.
Denial, Denial, Denial
Quick recap: For about 20 hours over the weekend, as many as 12,000 Windows systems received authenticity invalidations—messages indicating that their software was counterfeit, according to Microsoft. In a blog post late-Tuesday, Alex Kochis, WGA senior product manager, attributed the validation failures to "human error." Apparently, somebody loaded preproduction code on production validation servers.
In his post, Kochis made a surprising distinction between human error and technology failure:
"It's important to clarify that this event was not an outage. Our system is designed to default to genuine if the service is disrupted or unavailable. In other words, we designed WGA to give the benefit of the doubt to our customers. If our servers are down, your system will pass validation every time. This event was not the same as an outage because in this case the trusted source of validations itself responded incorrectly."
Say what? How can a 20-hour lapse in validations—where customers received notices that their software was counterfeit—not be called an "outage?" If Windows users can't validate—or, worse, receive invalidations—the service is unavailable, which by definition is an outage.
If the power grid goes down, even by human error, that's an outage because electrical devices have no juice. If MSN Messenger service goes down because of human error and there is no instant messaging, that's an outage. The validation system failure is an outage.
Kochis has engaged in a common Microsoft practice of semantics. I've seen a lot of this over the years, and it's something Microsoft customers and partners should really understand. Kochis qualified the WGA breakdown in a way that satisfies Microsoft's public relations and business objectives and diminishes the impact of a fairly significant event. I suppose it's comforting to know that if some whacko blows up Microsoft's data center, all Windows Vista users will get validated. But the no outage claim is still a denial of what really happened.
WGA technology denial runs deep. The company claims that there are a small, almost immeasurable, number of false positives, meaning that some legal Windows copies are identified as counterfeit. Microsoft support forums—and Microsoft Watch comments, for that matter—are full of complaints from people who claim to have received false positives.
Last November, my mom's Windows XP Pro failed validation, and she received pop-up notices indicating that her software was counterfeit. I personally configured that laptop and the software was legally purchased.
Later, a Microsoft support technician spent about four hours with my mother troubleshooting her problem. The tech identified a corrupt encryption file on mom's computer. Windows XP Pro validated, after the technician replaced 10 DLLs.
I counted the outcome as a false positive. Microsoft didn't agree. Their rationale was that Windows XP failed validation because of file corruption on the PC. There was no failure in the server process. Semantics, I say. Validation is a client-and-server process. Windows failed validation and indicated the software was counterfeit. That's a false positive. Period.
But Microsoft executives don't want to admit problems with the WGA system, because:
- Some Microsoft executives are giddy with excitement over just how much additional revenue the anti-piracy could generate (that's the aforementioned anti-piracy Crack, as in drug, not security breach).
- There is a natural tendency toward denial to justify a program that's questionably in the customers' best interests, because it treats them like criminals. By conservative estimates, in the United States, eight out of 10 computers have legal copies of Windows.
- Microsoft executives are concerned that any admission of WGA problems will undermine confidence in a program that some customers already regard as being intrusive.
Anti-Piracy Addiction
The money issue—that drug-like high from the belief WGA will generate more revenue—is most disturbing and perhaps most out of touch with reality. Piracy studies by organizations like BSA (Business Software Alliance) put out staggering numbers of lost profitability. The worldwide piracy rate was 35 percent in 2006, according to BSA, with an estimated revenue loss of $40 billion. U.S. piracy losses topped $7.2 billion, gaining significantly for the first time in four years. That's a whole lot of money to be made by somebody.
But the assumptions behind revenue loss estimates like BSA's tend to be lopsided. They typically assume every pirated copy would be a sale, which in many emerging markets is likely not to be the outcome. There's a big difference between what people will pay (how's a buck for Windows on the streets of Beijing) and what Microsoft would have them pay. Unless Microsoft substantially lowers Windows prices across the globe, there will never be a one-to-one replacement correlation between pirated and legally obtained copies of Windows.
I've talked to many WGA product managers and other executives over the last couple of years. Many have smoked this anti-piracy Crack, believing that WGA will curtail the piracy problem and generate significantly more Windows revenue. Yet, there is nothing in the piracy numbers to suggest WGA has had any measurable impact on piracy, anywhere. But there is a measurable impact on paying customers: 12,000 of them were invalidated over the weekend and, based on support forums, many others are tagged with false positives every day.
The fundamental problem with WGA is simple: It goes after the wrong target. Microsoft really isn't looking to catch Jack or Jane consumer, but, rather, partners that break the rules. The WGA program uses Windows users to go after sellers of unlicensed or counterfeit software. People that turn in their resellers receive free or discounted replacement copies of Windows.
The approach penalizes some customers whose only crime was buying a new PC. Should those customers be punished because the seller broke the law and loaded pirated copies of Windows? The buyer shouldn't bear the burden of the seller, which is the party stealing from Microsoft.
But the method is another form of Microsoft anti-piracy Crack, because in some circumstances WGA works. WGA contributed to the July breakup of a Chinese piracy ring. More than 1,000 piracy victims turned in CDs and other materials, after their copies of Windows failed validation and they agreed to help Microsoft in exchange for copies of legitimate Windows.
Will worldwide piracy significantly diminish because of the bust? No, because most piracy occurs on a much smaller scale.
To be absolutely clear, Microsoft should be paid for its software. But WGA isn't the best way, and there are flaws in the system that Microsoft should admit so that they can be fixed:
- False positives are a reality.
- The weekend failure was an outage.
- Business customers bear the burden of re-activating Windows within every 180 days.
- All customers are treated with distrust, because Microsoft wants to card the many to get to the few.
- Windows' "reduced functionality mode" is a remote off-switch that sends the wrong kind of message to customers about privacy and trust.
- Customers are used—penalized—by Microsoft to ferret out reseller lawbreakers.
People shouldn't steal software. But neither should Microsoft make its customers pay for thieves' mistakes, which is what happens every time a legal copy of Windows is invalidated. To say false positives don't or rarely happen is a corporate form of self-denial.
I turn the conclusion of this post over to commenters.
Related Posts:
- You're Not Genuine Enough, Microsoft Watch, August 25, 2007
- Broken Windows, Microsoft Watch, August 9, 2007
- Microsoft's 'Big Mac' Pricing, Microsoft Watch, August 6, 2007
- Windows Activation Trojan, Microsoft Watch, May 6, 2007
- One Deactivation Too Many, Microsoft Watch, March 6, 2007
- What's the Worth of Free Vista Tools?, Microsoft Watch, February 20, 2007
- I Was Carded by Windows Vista, Microsoft Watch, February 1, 2007
- Another Vista Activation Crack Appears, Microsoft Watch, December 27, 2006
- Mom's Genuine Holiday Surprise, Microsoft Watch, December 21, 2006
- Vista Anti-piracy Effort Will Drive People to Linux, Microsoft Watch, December 14, 2006
- Vista Crack Means Big Trouble, Microsoft Watch, December 8, 2006
- WGA: Friendly Face, or Saving Face?, Microsoft Watch, November 29, 2006
- My Mother is a Software Pirate, Microsoft Watch, November 14, 2006
Comments (52)
Windows Genuine Disadvantage
http://www.securityfocus.com/columnists/409
“ Indeed, the [Microsoft] EULA here is more onerous and less clear than that which the FTC found actionable for online spyware manufacturer Odysseus, who purported to allow people to download software to make Kazaa P2P software anonymous, but which actually collected personal information and sent adware to the users. In plain terms, spyware EULAs aren't enforceable, and the WGA license sure sounds like a spyware EULA. ”
Posted by Marco | August 30, 2007 8:06 PM
I simply reinstalled Vista Basic on another hard drive (reformatted), and removed the original, within the same computer and had Vista Basic fail validation. I was forced to call Microsoft and quote a 64 character code and get a new 64 character code to reenter. There was a significant wait time on hold and the Microsoft rep's tone made me defensive, as if my explanation that I reformatted an existing drive on the same machine was inadequate. What if I wanted to sell the machine without Vista and reuse the license on another machine? Another call to *beg* for another 64 character code?
WGA is completely unacceptable to me. I will not buy any more Microsoft products (including Office, etc.) due to the unreasonable restrictions on upgrading and maintaining my own Windows/MS product installations in my home office. I will not be reduced to begging for access to a product for which I paid.
Posted by Michael | August 30, 2007 10:49 PM
sorry, but there is no way in hell that wga is any bebefit to consumers. it's only benefit is to microsoft's bottom line. not that this is wrong, but don't try to spin wga as being customer centric.
Posted by gary | August 30, 2007 10:51 PM
Kochis statement is as clear as it can be.An outage is when the system is down. It does not respond for some technical reason. In this case the system was not down, that is the system responded, but it was filled with wrong data, to simplify as much as possible what kochis said. Plain simple and clear.
I totaly disagree with your assessment that WGA is not effective in fighting piracy. I don't like WGA either. But it is very very effective...Ask the millions of people around the world with pirated windows systems of all versions...
Posted by evan | August 31, 2007 1:47 AM
I can't upgrade to Vista if it's going to phone home every 180 days. I run pro-tools in my recording studio, it is not connected to the internet and I'm not going to jump through Microsoft's hoops every 6 months just because they suspect me of being a criminal. And what would I have to do to earn their suspicion? Why, be a paying customer of course!
Luckily, pro-tools runs best on Mac. When it comes time to upgrade, there is no case for me to go with Windows again.
Posted by Ben | August 31, 2007 1:54 AM
Last week I updated the BIOS on my eVGA motherboard.
No hardware was touched.
After a successful reboot Vista informed me that my fully legitimate copy of Vista Ultimate needed to be activated in 3 days.
What had happened was that the validation code used the BIOS version number to validate. When that version number changed it dropped dead.
i used the (excellent) Vista recovery and it still gave me the same message.
I notified eVGA of this issue so that other users wouldn't fall into this trap.
I went to the official Microsoft Vista validation site ( http://forums.microsoft.com/Genuine/ShowForum.aspx?ForumID=1004&SiteID=25 ) to report on this issue and to advise the product development team to use the motherboard serial number instead of the BIOS version number as the serial number can't be changed whereas the BIOS version can change frequently especially with the latest motherboards.
After 22 posts I finally got one of the moderators to say that this will be passed on to the relevant team.
I did not ask for any help. In fact I said in my first post that I require no assistance, I'm only passing this on as an informational.
Of course the first reply was to phone Microsoft to get another serial number.
Typical reponse. A new serial number does not help my now dead image. I should not have to phone anybody about a legitimate copy of the software. Microsoft have no business in the BIOS.
Serial number, yes. BIOS, no.
Posted by Tom | August 31, 2007 5:21 AM
Evan you are joking about WGA being affective. A friend of mine has legal copy of Vista but never entered his serial number. Yet he has used a crack to activate it. When I asked him why, his reply was that he will not be bothered by WGA this way. And you know what, he never has been bothered. His Vista displays the genuine logo and is able to receive updates.
How on Earth can you claim that WGA is a success when innocent customers are being flagged as pirated yet a cracked version that should be flagged as illegal shows genuine. That doesn't make any sense.
Posted by William | August 31, 2007 6:54 AM
First of all let me be very skeptical about what people claim. I did not say that I like WGA nor that it is unbreakable. There are probably people out there that have bypassed WGA for a period of time (WGA is being updated continously). However, I have not seen a massive exploit available. In my opinion, however, it is effective in reducing pirated copies of Windows. The glitch that happened is of course unfortunate and resulted in no real loss or damage. The fix was simple enough for those affected by it. It's too early to claim WGA a success story for Microsoft.
Posted by evan | August 31, 2007 7:48 AM
The war on piracy is as much a hoax as the war on drugs. If you take one of those piracy groups out another one will pop in its place within a few days. Why? Because there is a demand for their pirated products much the same way it is for drugs.
My take on the situation is the following. WGA will only benefit Microsoft's competition. My reasoning is the following.
While WGA might help fight certain groups of pirates. As soon as you take them out another group will hop right in. People want to buy Windows at a buck a copy and as long as there is a demand for that there will be a supplier.
Joe clearly stated that 8 out of 10 computers in the US are legit. That means only a 25% increase in sales if those 2 remaining are made legit. Outside the US the potential is greater as there are growing markets. People who have never had a PC. Catch is these are poorer markets too. Who can't afford 300+ bucks for Vista (BTW Office Depot/Office Max in Mexico sell Vista Ultimate at 600+ bucks, so I'm talking Home Premium here).
This means folks in the market with the greatest potential for PC sales don't have the money to buy an expensive OS. Its not that they don't want to. They just don't have the money. Minimum wage here is a little less than 5 bucks A DAY.
So comes the easy way out of cracking the OS. Once cracked, as William says, Vista nags you no more. So the freeloaders get no problems while the rightful get bothered. Now they "rightful" have money and thus if bothered enough can take their business to another company (can you read Apple). Here lays the greatest risk to Microsoft. That the rightful paying customer takes his/her business elsewhere.
We have seen this over the past few months. Which were the top sold laptops in Amazon.com during Christmas? Apple computers. Many may argue that it is a small number and indeed it is. Yet little by little the mass grows and as more people use it more developers are interested in building apps for it. As more apps come out more leverage for the platform is built.
In the end the only way to cut down on piracy is to reduce the demand of pirated copies. The only real and effective way I see to achieve that is to lower the cost of the software. WGA offers at best a short term benefit, but could be really damaging in the long run.
Posted by Gerardo Tasistro | August 31, 2007 8:13 AM
Evan, Vista was cracked about 3 weeks after RTM. They have yet to disable my friends PC. It still says "genuine" even after numerous updates. Perhaps it will be deactivated come SP1 but I don't hold my breath. The crack that my friend has used basically fools Vista into thinking it is running an preinstalled OEM version of Vista that does not need activating. Unless I am mistaken then the only way around this is to disable all the genuine OEM machines as well.
Now if people are buying this version of Vista from pirates and installing it on their home machine and it is validating as "genuine" then I fail to understand how you can still class WGA as being a success in stopping piracy and that WGA does not have a massive exploit.
Surely if an illegal copy can show "genuine" and still receive updates without ill effect then that must show that WGA is totally infective in stopping piracy?
I imagine that customers of the pirates would not back to them for tech support if in 6 months their vista shows as counterfeit. They would probably go back and buy the latest cracked copy for a $1.
Posted by William | August 31, 2007 9:14 AM
I asked my friend the other day what he would do if his version showed as counterfeit. He laughed and said he would install another crack. So I asked what he would do if that failed and he made a good point. He said if all else failed he still has a genuine serial number that he hasn't used. He said he doesn't see what he is doing as inherently wrong as he has actually purchased the software he claimed that all he has done is not agree to using WGA in the EULA.
Given that he has a receipt I am wondering if he could in fact actually be sued by MS. I imagine that he would have a good case in court when he takes his receipt in. I am not an expert on the law and I am not prepared to take the risks he does. However, I can tell you that if my version of Vista was flagged as counterfeit for no reason then I would be using those cracks in an instant.
And basically that is the real worry for MS. If you treat you're customers as criminals for long enough then don't be surprised if they start acting like one.
Posted by William | August 31, 2007 9:20 AM
William,
You are probably living in the U.S, so you are not aware of how many copies of pirated windows softare are out there. In my country, most copies of windows up to XP, were pirated. I do not see that happening with Vista. WGA is the reason. Your friend is proabably running one of the so called frankenbuilds. I have seen claims of cracks available, but most of them are too complicated for the average user.
Posted by evan | August 31, 2007 9:54 AM
Nice piece. You're right on top of these idiots, as usual.
This morning, I'm in the middle of some important work and my laptop reboots. "TEE" (The Evil Empire) informs me they had to reboot for me for important downloads to take affect (means...those that somehow squelch competition).
No thanks! What if I'm in the middle of a deadline Word document? What if I have to get an email out pronto?
Worse yet, It's 10:00 a.m. I open the laptop up, connect to Internet, attach to projector and...in the middle of my second Powerpoint slide...poof!
Do you Softies ever think past the noses on your faces. Idiots!
Posted by Microstiff | August 31, 2007 10:09 AM
I wonder if anyone knows how much of my systems resources and my internet bandwidth are consumed by WGA and it's like. Microsoft always seems to assume that I have infinite system resources, and has no apparent conscious about consuming them for their own purposes. It's just the hidden Microsoft "tax" for running the software, I guess.
Posted by Noel | August 31, 2007 11:17 AM
Evan, if you read my post I said my friend purchased his copy of Vista retail complete with receipt. It is not a frankenbuild.
Have you ever thought that people are not pirating Vista not because they are unable to but because people are asking for XP instead. Perhaps this has everything to do with the hardware requirements being considerably more under Vista to achieve the same performance as XP.
I can also assure you that the crack he uses is a matter of double clicking the exe file. Hardly what you call complicated.
Posted by William | August 31, 2007 11:19 AM
Microstiff,
I return the characterization back to you. Of course none of your claims are beleivable. William, we'll see for how long your friend's crack will work...
Posted by evan | August 31, 2007 11:32 AM
This was part of Kochis' comment above, quote, "In other words, we designed WGA to give the benefit of the doubt to our customers."
Doubt? What doubt? Kochis just admitted that Microsoft considers users guilty of piracy until they prove their innocense. He also admits that Microsoft feels it has the right to "give" users the benefit of that doubt.
I'm so glad I downgraded to the last pre-big-brother OS, Windows 2000 Pro SP4, and equally glad I started experimenting with Linux distributions. Little by little, I'm weening myself off Microsoft. Hehe, but I must correct my use of the term "downgraded." If the truth be known, it sure feels like I "upgraded." Even my colleagues and friends who choose to remain tied to a Microsoft OS have "upgraded back" to XP from Vista. And even they are beginning to realize that WGA should be renamed to WGPITA - Windows Genuine Pain In The ... well, you can figure it out (grin).
Posted by AlecWest | August 31, 2007 11:48 AM
Evan. I think you're missing the bigger picture. MS will never combat piracy with digital locks as someone will always come along and pick them.
Posted by William | August 31, 2007 11:50 AM
Evan, what you're saying is entirely semantically accurate, and misses the point, just as Joe points out. I agree with Joe - thousands of users will have spent (tens of?) thousands of hours trying to figure out why the hell their OS won't activate due to a fault at MS's end. They won't have been able to use their machines - I call that an outage. It doesn't matter if the servers are 'operating' if they're preventing users using their legally bought copies of Windows.
The whole 'big brother'-ness was why I stuck with Win2k for years. I wanted to get a pre-built Linux laptop to replace that, but they're pretty rare here. Currently I'm thinking that next time, I'd even go Apple over Windows (but I'd prefer Penguin).
Posted by Andy | August 31, 2007 12:21 PM
P.S. to my last. Frankly, my mind is boggled by the few remaining XP/Vista users who can't see the big picture.
A few years ago, I was an associate editor for a mystery magazine. I've also published mystery short stories, articles on the genre, and interviews of genre luminaries. So trust me when I say I can recognize crime fiction when I see it ... and also crime non-fiction, like in XP/Vista's case.
Imagine living in a society where EVERYONE is considered a suspect for the crime of software piracy. And imagine that the police can pull EVERYONE in off the street, put EVERYONE into a small room, and shine a bright light into EVERYONE'S eyes while detectives grill us. Then imagine that even when detectives are convinced of our innocense, they can (and will) drag EVERYONE right back into that same small room, shine that bright light into EVERYONE'S eyes again, and do so day after day after day for as long as EVERYONE still uses the software suspected of being pirated.
Is that a description of how life should be in the USA ... or a description of how life was under Stalin's Soviet Union?
Frankly, I think that everyone who can should find themselves a legitimate copy of Windows 2000 Pro SP4 and gravitate to it (as I have) and begin exprimenting with open-source operating systems like Linux (as I have). As Karl Marx once said, "You have nothing to lose but your chains." And also remember what The Eagles once sang - "So often times it happens, that we live our lives in chains, and we never even know we hold the key."
For myself, I continue the lyrics from that song by The Eagles - "Me, I'm already gone."
Posted by AlecWest | August 31, 2007 12:23 PM
Microsoft has intemidated many customers with WGA. I've personally found it to be a big pain in my behind. I should be spending my time using my computer for somthing useful instead of constantly having to prove to Microsoft my software is legitamate. Things like WGA will keep older versions of Windows such as W2K living long after their designed lifespan. I use W2K at home and I'm less than a week away from having all my software testing done to switch my production XP box at work to a Linux workstation. MS is going to find out that WGA is going to make them compete against their older products or people saying screw MS and embrace Linux.
Posted by Robskorner | August 31, 2007 12:28 PM
My take on this subject is the same as William who in their right mind would want to pirate Vista? Windows XP is the still the ticket.
Posted by just a drone | August 31, 2007 12:29 PM
I refuse to purchase Vista. Just bought a new Dell laptop for my wife this week and configured it with XP. Why would I want to bloat my system with all of the Vista crap? Microsoft really screwed their hardware partners with the Vista release, until these partners mutinied and had to rebuild new XP drivers for all of the new platform parts they had created to support Vista. Seems everyone in the channel was excited about hardware upgrades, except the customers...
Microsoft needs to take Vista out behind the barn and shoot it in the head and start working on a real replacement consumer OS for XP. I say death to Vista!!!
Want a really cool, interactive OS? Go buy a Mac!
Until then, long live XP!
Posted by Mike | August 31, 2007 1:22 PM
Mike,
I agree to a point. Vista is a flawed operating system, hobbled by validation scenarios. But never forget that XP is still hobbled by validation scenarios like WGA. And, as this incident taught us, what CAN happen WILL happen.
I recently read a blog entry regarding Vista. Many industry insiders suggest that PC owners will choose to "sit out" Vista ... hoping that the next OS from Microsoft (codenamed Windows 7) will be better. I'm a former WinXP user. But now that I've used Win2K for a while, I see more disadvantage than advantage in XP ... and now, Vista surpassed that scenario in the disadvantage column.
If Windows 7 (slated for release in 2010) continues the Microsoft policy of police-state marketing, I predict it will be the last operating system they sell in a marketplace where they dominate. It will be like trying to sell a music publisher on a new Michael Jackson album when it's clear fandom has abandoned him ... and future Microsoft operating systems will be about as welcome in the home as a guest who refuses to leave when everyone else knows the party is over.
Posted by AlecWest | August 31, 2007 1:48 PM
Mates, I guess I have to repeat myself again, "No Self respecting Bloody Pirate would pirate Vista." Vista is CRAP. XP Pro is the choice of Pirates everywhere, despite what Microsoftie Trolls here would like to try and tell you.
Sure the WGA in Vista has been broken several times now. The Frankenbuilds are no good, NoPe. If your going Pirate something Mate, at least have the smarts to get something good. Vista is not good.
Bloody Gates and Ballmer should be walking the plank for releasing a product like Vista.
And then there is the Freetards, who think that they are doing everything correct. So maybe you are, but you won't be able to play all the latest games. But Mates, to be truthfull, Vista has too many problems, and too many performance hits to ever be a gaming platform. Gaming will die on the PC with XP, unless the Freetards can get enough people using Loomix to matter. Then and only then, will gaming on the PC enter a new golden age.
Posted by Captian Jack Sparrow (Fake) | August 31, 2007 2:50 PM
Captain Jack,
I yield to you as the authority on using expensive hardware and software as a "toy" (grin). But, I don't think that describes the majority of home computer users (and certainly not business computer users). Diehard gamers have gravitated to standalone game systems that do little more than gaming. And on your use of the term "Freetard," I'll leave it up to everyone else to decide who wears the dunce caps ... people who use their hardware/software productively, or people who fiddle-fart their time away because they otherwise have no life.
Posted by AlecWest | August 31, 2007 3:18 PM
Microsoft has for many years increased in arrogance. The insistence that their OS be connected all the time is sheer arrogance and stupidity. WGA is probably only going to get worse unless substantial numbers complain or quit using it, neither of which is likely.
Posted by Charles C | August 31, 2007 3:40 PM
The case for and against WGA is Econ 101 -- supply and demand. In theory, for any price, a certain quantity will be demanded. At a higher price, less will be demanded. At a lower price, more will be demanded. The market will reach equilibrium when the quantity supplied at a particular price is equal to the quantity demanded at that price. "Price elasticity of demand" is the amount that the demand changes as the price changes.
As others have noted, WGA is a PITA. The annoyance of dealing with it and with its false positives effectively raises the cost of using Vista, thus lowering demand. Anti-piracy measures increase the effort necessary to make pirate copies, thus increasing the cost of pirated copies, thus lowering demand for pirated copies but also the "market share" for Vista.
As Joe notes, "But the assumptions behind revenue loss estimates like BSA's tend to be lopsided. They typically assume every pirated copy would be a sale, which in many emerging markets is likely not to be the outcome. There's a big difference between what people will pay (how's a buck for Windows on the streets of Beijing) and what Microsoft would have them pay."
Joe argues that the demand for Vista is elastic. That is, the demand will vary greatly with price. Microsoft is betting that the demand is inelastic. That is, that people will buy Vista no matter the price. I think the truth is somewhere between. In the U.S. and other more developed countries, demand for Vista sold with new PCs is relatively inelastic. Most new PCs will continue to be sold with Vista. In lesser developed countries, I agree with Joe, demand is much more elastic. Either MS will cut deals to offer less expensive versions of Vista in these markets or it will see decreased demand. In both lesser and more developed countries, demand for Vista upgrades is relatively elastic. The higher price of Vista with WGA and the higher cost of piracy will lead to lower demand.
Other posters have identified the alternatives to Vista. They are Win2k, XP pre-WGA, Linux, and Mac. All will see increased usage. However this increase will be more pronounced in the upgrade of existing systems and in lesser developed countries.
For MS, will the increase in price offset the lowering in demand? Personally, I think MS is shooting itself in the foot. However, I'm sure that MS has economists on its payroll. They must have the other opinion.
Posted by Karl | August 31, 2007 3:52 PM
Good post Karl:
Karl Says:
"I think MS is shooting itself in the foot.
[...]
However, I'm sure that MS has economists on its payroll. They must have the other opinion".
@karl:
I think they missed their foot & 'shot themselves in the head'.
Economists opinion(s) are second to that of the $hareholders.
Posted by n0ne_n0ne | August 31, 2007 4:38 PM
Vista pro says you can use a 2nd copy on the same PC under a "virtualization" technology... well... this naturally doens't work automatically... it takes a good hour arguing what "vmware" is with the MS phone reps, and escalating to higher-and-higher support tecs (if you can cinvicer the lower ones to *let* you) before you can find anyone to begrudginly honor the license terms.
I quoted my license wording about 10 times, to about 5 different staff (a sixth staffer refused to listen to it, and kept cutting me off and telling me to shutup when I tried to quote it!) over the hour it took to get them to allow the activation.
The sales/marketing people need to talk to the WGA people a bit more I think!!!
Posted by vmware | September 1, 2007 10:45 AM
http://www.channelregister.co.uk/2007/08/30/pcworld_results/
Title of the above link: Vista launch jamboree leaves PC World with indigestion
Quote from the link; "CEO John Clare said that PC World “delivered strong sales growth, however gross margins have been materially impacted as a result of increased promotional activity to reduce one-off hardware stock levels that resulted from lower than expected demand for Vista products.”
Posted by chips | September 1, 2007 5:50 PM
Chips
Yet another case where the Headline does NOT match the content of the story.
And of course Chips went for the headline didn't he !!
The important part here to look at is "lower than expected demand". They were not saying that Vista products did not sell, no that was NEVER said, they were merely saying that they were "Lower than expected" at that is all !!
Chips congratulations mate you have done it yet again (my god that book "How to make a mountain out of of a mole hill" that you have, must be really frayed around the edges by now).
Posted by Neil | September 2, 2007 2:02 AM
Pot, Kettle, Black springs to mind Neil. You're hardly one to preach to others about not reading articles. You just lost the argument and any moral high ground you think you had. Perhaps you should practice what you preach.
Posted by William | September 2, 2007 7:06 AM
William
I am afraid I do not know what the hell you are going on about !!
By the way I am still waiting for you to say which OS you use, you are not going to say are you??
Posted by Neil | September 2, 2007 7:51 AM
I see 4-6 false positives WEEKLY. The WPA gives no time to repair a network driver to comply. Sometimes we get the 3-day valadation exclusion allowing us to activate windows (after the Nic is working). I've personally have told Microsoft managers that my shop was going linux because of the wpa. I spent 5 hours with various managers getting a false positive reversed. They said my 87 year old client had illegal software (Factory Dell with COA). I thought as a Microsoft Partner and a MCP I'd get some help. I had to go thru member services to get the false positive overturned. Microsoft does not trust its partners or the general public. I have a fiancial incentive catching illegal software, I sell them our legal software. Because Microsofts stance on this WPA, I'm actively going to Linux on my OEM builds. I've spent Tens of thousands in education, and software from microsoft. If they don't change there ways, It's ByeBye Microsoft.
Posted by Rick | September 2, 2007 12:17 PM
Joe, Microsoft is legitamate in its own right to pursuit the validation of genuine copy of its software.
Although it fails several times and make many of us uncomfortable and inconvenient , Microsoft is still trying to fix it.
You mentioned about " cracked' , it seems that you are happy and excited when the WGA was defeated by hackers and indirectly you are promoting cracked and warez software
You should think carefully before you write
Posted by John | September 2, 2007 10:51 PM
John
"it seems that you are happy and excited when the WGA was defeated by hackers and indirectly you are promoting cracked and warez software'
Nothing new in Jope being happy when something doesn't work for microsoft hey Joe !
Joe will tell that he isn't biased agaisnt MS but I feel that that's not really correct.
Most of the time the headlines here are against microsoft (and the content as well), you might be lucky and get one good one for microsoft in a month and that would be about it I'm afraid.
Something like our friend chips (ala Mr. Skype Me) who our defacto news man on everything Linux.
Or William who bags Windows Vista and Xp and then refuses to say which OS he uses.
Posted by Neil | September 3, 2007 12:53 AM
An article by Mary Jo Foley: Microsoft third-party licensing and activation server set to RTM
http://blogs.zdnet.com/microsoft/?p=691
Quote: "Although SLP won’t provide the kind of anti-piracy checks that Microsoft’s own Windows Genuine Advantage (WGA) system does, it does provide third parties with product-activation technology."
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It does seem like its coming close to WGA though.
Joe Wilcox has been correct in his article about how MS has embraced WGA, and the money generated from it. But at some point, WGA and SLP will become to much of a burden, for most users.
Posted by chips | September 3, 2007 1:46 AM
A look at the morale problem at Micro$oft, titled:
How To Make A Microserf Smile
http://www.businessweek.com/magazine/content/07_37/b4049065.htm?chan=technology_technology+index+page_top+stories
Posted by chips | September 3, 2007 1:57 AM
a link titled; " Fatal mistake? Microsoft's cavalier disregard for its customers"
http://www.computerworld.com/blogs/node/6097
Quote from the link; "It was just one more example of the erosion of the user experience for honest paying customers that Microsoft appears to be cavalier about."
Posted by chips | September 3, 2007 8:32 PM
How long do you think it will take before someone writes a bit of malware to deactivate millions of legit installations of windows using the WGA?
Posted by anonymous coward | September 4, 2007 11:20 AM
http://www.appscout.com/2007/08/ubuntu_beyond_the_terminal_1.php
"Ubuntu: Beyond the Terminal"
"Linux, here I come. Making the leap to Linux was a bit scary for me. I've never experienced it before, let alone even seen its interface and what it can do. And it seems more now than ever that more people are trying out Linux: PC Mag's latest issue features a guide on how to install Linux; various Dell systems ship with Ubuntu; and recently former editor-in-chief Jim Louderback hinted that he's sick of Vista and may make the switch. With much support from my boyfriend Eric, who's also a first-time Linux user, we dove head first into the deep waters of Linux."
---------
I recommend to use XP and Ubuntu on dual boot.
Posted by Marco | September 4, 2007 12:08 PM
The solution to this is very simple: Every single one of us who pay for legitimate Microsoft software should all boycott Microsoft and not purchase Windows Vista, Office 2007, etc. In cases of purchasing a new computer, the consumer should either hold off unless absolutely necessary or purchase a computer with either Windows XP (if available), or better yet, with Linux and then install Open Office. I have been steering people I know toward the latter with no complaints so far. Let Microsoft know (if and when they ask) what you are doing. If we, as the American public, can "vote the bums out" with our politicians on Election Day, then why can't we as consumers do the same with Microsoft with our own hard-earned money?
Posted by Anonymous | September 4, 2007 12:24 PM
Quote from anonymous coward :
"How long do you think it will take before someone writes a bit of malware to deactivate millions of legit installations of windows using the WGA?"
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There has already been plishing type attacks (social) on malware pretending to be WGA, asking for credit cards numbers, etc. But thats the crooked profit motive, and not the sicko motove to just destroy someone product or a users OS. While I am not a M$ fan, these people who write these types of malware need jail time.
There sure to be more in time. Also, look at the DRM itself to be an eventual target. DRM will be a vehicle that is built into the Vi$ta OS that will cause reduce modes, so it to will probably be an attack vector for those sickos who write these types of viri.
Posted by chips | September 4, 2007 1:08 PM
Quote from Anonymous :
"The solution to this is very simple: Every single one of us who pay for legitimate Microsoft software should all boycott Microsoft and not purchase Windows Vista, Office 2007, etc. In cases of purchasing a new computer, the consumer should either hold off unless absolutely necessary or purchase a computer with either Windows XP (if available), or better yet, with Linux and then install Open Office."
----------------------------------------------------
I have been boycotting MS. While I would like a new laptop, there is no way that I will buy one with Vi$ta or XP on it. MS still makes money on XP, so I refuse to buy it again.
Look at it this way, M$ still gets the money from and computer with either XP or Vista on it. So my choices are either to buy used laptops, or some Dell or Lenovo with Linux preinstalled on them.
The laptops that go on sale, in the local stores, are always the ones that have Vista on them, as these are the hardest for the stores to dump.
Posted by chips | September 4, 2007 1:23 PM
This is yet another example of why draconian anti-piracy measures are counter-productive.
I still have Win2K Pro on my system at home, and unless WGA is dropped, I will not be purchasing any more current version of Windows.
When it finally gets to the point where there are too many newer programs that won't function on 2kP, then I will be switching over to some flavor of Linux. This was a decision I made when XP was still fairly new. Vista was never an option - too much bloat; I'll take function over form.
The calm and rational response to combat piracy is to make owning a legitimate copy of the program more attractive than owning a pirated copy. Making it more difficult for legitimate users to actually use the program is counter-productive.
Ubisoft learned this the hard way and as a result actually ceased making use of the anti-piracy program SecuROM after they realized that the cost of the program itself, plus the lost sales and goodwill, plus the additional and otherwise unnecessary costs of customer service and support far outweighed any possible increase in sales they might have gained by having anything more intrusive than a simple key code.
Currently 2k Games is learning just how expensive SecuROM can be with their recent release of Bioshock. Not only were there working pirate copies of the game, without SecuROM, available within a week of release, but actual owners of the game are turning to the pirate groups just to be able to play the game they paid for. And, to add further insult to injury, people who pirate the game, get a BETTER experience than legitimate owners, in the form of increased frame rates, and better overall performance from their computers even when not playing the game.
^-.-^
Posted by Andara | September 4, 2007 2:29 PM
I wonder how many people that are buying new PC's and installing XP on them are getting their money back from MS for not using Vista?
Perhaps it would be a good idea to become a middle man. Brokering refunds from MS for people who are not going to use Vista on their new OEM PC. Obviously for a cut.
Posted by William | September 4, 2007 4:27 PM
Joe;
Whatta think will happen when people find out that Microsoft's WGA is doing far more than just validating software?
Hmm, best look into it...
Posted by Douglas S. Taylor | September 4, 2007 6:15 PM
Long, long time user of Microsoft's products, but like others have said, M'soft is truly shooting itself in the foot. In the future, when Vista's the only thing available, we'll get it to continue using Visual Studio for development, but clients will be Linux and Mac. The idea of "degrading" my machine is 100% unacceptable.
Posted by Scott | September 5, 2007 3:41 PM
Save your breath. Trying to get Microsoft to hold themselves accountable and getting them to admit wrongdoing is like talking to a brick wall, with much the same results. As long as they have no competition, they're going to do whatever they feel like, and to hell with what customers want.
When is somebody going to come up with an operating system to compete with Microsoft Windows? You'll see for sure that once Microsoft gets some good healthy competition, their entire attitude will change. And then they'll start to listen to and do what the customers want.
Posted by Topaz | September 6, 2007 12:51 PM
link below is titled; To WGA Hell (and Back)!
http://weblog.infoworld.com/enterprisedesktop/archives/2007/08/to_wga_hell_and.html#comments
Quote from the link; "In summary: I really hate WGA. Not because I hate Microsoft (I don't). Not because I begrudge them their revenue or the right to protect their intellectual property (hey, I'm a commercial developer, too). No, I hate WGA because it's unpredictable. You never know what might set it off. And as my experience demonstrates, the results can be truly disastrous (it would have taken weeks to fully reconstruct this particular system's well-tuned build environment)."
Posted by chips | September 7, 2007 5:30 PM
Hello everybody, i have used windows vista home basic but the 30 days expiration period has been finished now OS is asking for Activate the window how can i find windows vista home basic crack , please help me.....................
Posted by Gurdeep singh | November 28, 2007 1:23 PM