The Real Story behind Windows 7 Phone Home


The Real Story behind Windows 7 Phone Home

ie: my guesses about it

Lauren Weinstein reports on a new feature of an update to Windows 7 (apparently called KB971033?), which continually checks (once every 90 days) to see whether the installation is authorised/activated/validly licensed.  Some sites have discussed this and made something of the fact that it is voluntary to install, and/or checks to see that the installation is valid even if it has verified the copy as valid and even if the copy has already been authorised.

I tend to think this has not so much to do with piracy per se as solving a couple of Microsoft’s other problems.  The first is the lumpiness of Microsoft’s revenue.  It gets a heap of extra revenue when it releases new versions of whatever.  Microsoft has tried to overcome this by its assurance programs, in which users are asked to sign on to a subscription program.  However, ultimately the subscription programs are dependent upon Microsoft actually releasing new versions from time to time (what a drag!).

The second is the problem of proving losses.  If you make an illegal copy of a Microsoft product and then buy a legitimate copy (or as many legitimate copies as illegal copies you have made), exactly what has Microsoft lost?  Microsoft, for example, gets the same amount of money, it just gets it at a different time.    This is because there is no tying of the license to a particular period of time.   If a person made an illegal copy of Windows98 (say) 10 years ago and buys a legitimate copy today (yes, I know that may not be possible in fact) it is hard to see what Microsoft has actually lost, except the time value of money over the past 10 years (this, unfortunately, might lead to ‘gaming’ of the system, where a person makes illegitimate copies until they are caught, then buys legitimate copies to cover their nefarious activity).   Note: There is nothing specific about Microsoft to this argument, it applies generally to software licenses which are not limited in time.

Both of these problems are solved by tying.  Microsoft began tying a long time ago by tying copies to specific hardware.  This is what the authentication stickers are all about.  Their purpose is not to prevent piracy.  Rather, their purpose is to prevent a legitimate purchaser moving a particular copy from one computer to another.  If they can’t move the copy then, the theory goes, they must buy a new copy.   Moreover, by withdrawing product from the market, Microsoft can force upgrades to new versions of Windows.  If someone could take their legitimate copy of Windows XP from their old computer (and wiping the old computer and loading it with Linux) and load it onto their new computer, would they have bought Vista?

The next form of tying is to time.  The point of having the check being performed once every 90 days is to allow for the prospect of quarterly licensing.  You pay a fee each quarter in order to have continued access to your data.  The 90 day phone home is just the latest piece in the puzzle.  Others are things such as the time limited trial installations of office that OEMs force onto people.   In a year or two you will no doubt see Microsoft offering (initially) optional, low priced time limited licenses, with a view to moving the market over to the new licensing scheme over time.   Time limited licensing may also alleviate (although maybe not solve?) a problem that Microsoft faces with the Netbook form factor – that is, it is too expensive to pay any significant amount for a windows licence on a $300 (or cheaper) machine.  However, if you have a time based license, the first three (or six) months might be given away free or charged at a low amount.  This would allow hardware manufacturers to legitimately sell Windows loaded machines at the same price point as a Linux loaded alternative.

Just follow the bouncing ball…

See also: computerworld article, someone’s blog, someone else’s blog,

1 Response to “The Real Story behind Windows 7 Phone Home”


  1. 1 Sathya 24 February 2010 at 2:45 am

    Really good……


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