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Product activation is a license validation procedure required by some computer software programs. Specifically, product activation refers to a method where a software application hashes hardware serial numbers and an ID number specific to the product's license (a product key) to generate a unique Installation ID. This Installation ID is sent to the manufacturer to verify the authenticity of the product key and to ensure that the product key is not being used for multiple installations.

As a trial, Microsoft first used product activation in some versions of Microsoft Office 2000. Some copies sold in Australia, Brazil, Canada, China, Hong Kong, New Zealand and the United States required the user to activate the product via the internet. After its success, the product activation system was extended worldwide and incorporated into all subsequent versions of Windows and Office. This practice has become a subject of debate, primarily because it was one of the first widespread uses of a product activation system in a general consumer product.

An 'unactivated' product usually acts as a time-limited trial until a product key is purchased and used to activate the software. Some products allow licenses to be transferred from one machine to another using online tools, without having to call technical support to deactivate the copy on the old machine before reactivating it on the new machine.

Some companies require users to "transfer" activation when moving a product from one computer to another, or when replacing hardware or drives in an existing computer, or when reformatting a system hard drive. Transfer may involve deactivating a product on the old system before activating it on the new system. Users may be required to be online and to transmit the deactivation to the software provider.

The major criticisms of product activation schemes are that:

• If a computer is stolen or destroyed, the activations on it may be completely lost. It is only by the good will of the company to provide new activations. This makes backing-up to guarantee prevention of substantial loss impossible.
• Activations can force users with multiple computers to keep track of which purchased software instance is installed on which computer.
• It can cause inconvenience for the end-user, particularly if phone calls are necessary to complete activation or technical problems, such as firewall blocks or activation server downtime, prevent the activation process from completing.
• It can enforce software license agreement restrictions that may be legally invalid. For example, a company may refuse to reactivate software on an upgraded or new PC, even if the user may have a legal right to use the product under such circumstances.
• If the company ceases to support a specific product (or, for example, goes bust) then that purchased product may become unusable, or incapable of being (re)installed.
• Although many activation schemes are anonymous, some are accompanied by mandatory registration which require providing user's address, phone number, and other personal information before the product is activated.
• When a product has reached End Of Life, the company may no longer allow customers to re-activate their product.

• CD key
• Digital rights management
• Dongle

• Inside Windows Product Activation