The company experienced a consumer backlash when Windows 95 was released, thanks to a component called the Registration Wizard. It sent detailed information about a PC's hardware configuration to Microsoft, with the owner's permission. The Registration Wizard inspired all kinds of nasty rumors, including the bogus claim that Microsoft was scanning personal files in the process. Microsoft's executives concede that this software activation scheme presents certain public-relations problems. But they say they've already been using it with Office 2000 overseas and in copies sold in the U.S. education market.
Complaints have been few and far between, they insist.
But I believe that, once this system is exposed to the mass consumer PC market, it will meet much resistance. Features such as product activation could make ordinary folks worry that the wackos might be right.