Microsoft says that some 17 million copies of XP have shipped since the operating system was launched late in October. It's a safe bet that a high percentage of these sales and shipments were bunched at the very end of last year, and the very beginning of this one. Between end-of-year budget purchases, holiday promotions, and Christmas gifts of small-business PCs preloaded with Windows XP, millions of people are right now experiencing their first few weeks' with the new operating system. That means many users are heading for a surprise, as the internal counter inside every copy of Windows XP gets ready to enforce the mandatory "product activation" after one month of use. 

The true story about "Reduced Functionality"
I've covered the topic of Windows Product Activation, or WPA, before; there's no need to rediscuss it. But the key emphasis is this: The WPA system keeps track of how many times you've launched the software and/or how much time has passed. Before the end of a Microsoft-determined amount of time or number of launches, you must must contact Microsoft to receive a special 50-digit key to "activate" the software. This is separate from the serial number you need at installation. If you do not contact Microsoft and get the activation key, the WPA system limits your use of the unactivated software. 

Different versions of XP software react differently to WPA violations. For example, Windows XP is far harsher in responding to a presumed WPA violation than is Office XP (which includes stand-alone versions of Word 2002, Excel 2002, FrontPage 2002, etc.). In Office XP and its stand-alone "2002" components, WPA allows 50 launches of the software without activation. At the end of that time, if you haven't activated the software WPA puts the software into "reduced functionality mode." You can view your XP-created documents, but you can't modify them or create new ones. You can, however, still copy, back up, or otherwise access your files, or modify them with other, non-Office XP tools. In contrast, the Windows XP operating system's implementation of WPA goes far beyond mere "reduced functionality." 

Road closed ahead?
If Windows XP reaches the end of its one-month grace period without being activated, it simply locks you out, period. After login--even as Administrator--instead of seeing the normal desktop, you're shown a message: 

If you answer yes, you're taken through the activation process, after which--if your system successfully completes its activation--you can resume computing normally. But if you answer No or if your machine is unable to complete the activation process, you can't continue. You're stopped cold, completely locked out of the operating system. You can't do anything with XP, even if you have Administrator rights, until and unless you successfully complete the activation process. (Resetting the system clock to an earlier date via your PC's BIOS setup program won't let you regain access to a locked system. Once WPA is triggered, your system stays locked until it's activated.) An unexpected lockout can be a real problem. For example, if you're using XP's native NTFS file system, once WPA locks you out you can't even copy your data files to another machine to keep working. In fact, unless you previously set up your PC as a dual-boot system with a non-XP operating system in another partition, or unless you have DOS-based boot floppies available, you may not be able to do anything with your system. Of course, if you have boot floppies or can boot from CD or a second operating system on another partition, you always can start over by reformatting your XP partition. But unless you have a prior backup of your data, you'll lose everything. Once WPA locks you out, you can't back up your XP/NTFS files using normal methods. Most people don't have dual-boot systems or elaborate floppy-based recovery procedures. In fact, most people don't bother with backups. If that describes you, then once WPA locks you out, and until and unless you successfully complete the activation process, your shiny new XP system will be nothing but a giant paperweight. 

The clock Is ticking
If you're in your first month of use of XP and you haven't activated your copy, you need to know what's coming. WPA cannot be ignored, and will soon force you to activate or to stop using your PC. If you're going to stick with XP, you might as well proceed with activation now, before the last minute and before you're locked out. That way, if there's any problem with the activation process itself, you can continue to use your PC while things get straightened out. If you're not going to activate XP, you need to get your files into a non-XP, non-NTFS format soon, before WPA kicks in. Otherwise you may end up with no way to access or salvage your data. There are many things to dislike about WPA, but this  - being totally locked out of your system--is one of the worst, unless you know it's coming and take appropriate action beforehand.