As the company that sells envious amount of software, Microsoft has vast interest in fighting piracy and unauthorized use of its software. Since Office XP they introduced product activation. In the nutshell, this means that apart from required product key, you must activate the software with Microsoft in the first 30 days or 50 starts or something similar. Activation can be done over Internet or telephone.
It’s doubtful how effective this really is, since product activation can be voided with cracks. PA sounds like a good solution since it should prevent users of pirated software to do thing like automatic updates, but even that can be circumvented. I have no idea what impersonation routines Microsoft uses. I would expect AU service to ask for the product key and some sort of PA id which should not be easily faked or could be checked in some sort of internal database. This could also be nonsense.
But the locking of activation down to your computer innards - that is plain stupid. If you change any internal part - graphic card, hard disk, whatever - you need to repeat the activation. Death blow to the whole concept comes with the limited amount of activations per product key.
Let me illustrate…