The raw hardware information is not known or sent to Microsoft. Ensuring end user privacy is a No. 1 design goal for Microsoft with Product Activation. Users must have Internet connectivity to activate. The Internet method requires that the PC be able to make a connection to the Internet. The telephone method requires the user to provide information to a customer service representative over the telephone.
Counterfeiters are the real piracy problem.
Software piracy comes in many different forms, some more widely known than others. Each type of piracy is unique and often requires unique protection methods. Counterfeiting is a common form of piracy. Others include hard disk loading, Internet pirating and casual copying, or softlifting. An example of casual copying is if someone were to get a copy of Office XP and load it on his or her PC, then share it with a second person who loaded it on his or her PC, then share it with a third person who loaded it on his or her PC, and so on.