For more than a decade, Microsoft has lost money because of the way its activation program worked in Windows. 'Activation cracks' for Windows XP, Windows Vista, Windows 7, and Windows 8 have been readily available on the Internet, allowing anyone to bypass authenticity checks and essentially use Microsoft's desktop operating system for free. Microsoft has quietly updated this mechanism in Windows 10 in order to help prevent unauthorised usage or piracy of the desktop operating system.
There are several tools available online designed to let you retrieve the product key of your installed copy of Windows. However, if you try using any of them on Windows 10, you will be surprised to learn that the keys they return are generic. This is because of a fundamental change to the underlying activation mechanism in Windows 10, something Microsoft hasn't discussed publicly.
Prior to Windows 10, activation relied on a unique ID which was generated from hashes of your hardware and your product key. This allowed Microsoft to recognise your computer if you tried reinstalling the operating system using the same licence key, even with minor hardware changes.
As ZDNet reports, Microsoft has now gone to great lengths to change the product activation mechanism in Windows 10. If you have a legitimate copy of Windows, Microsoft will issue a certificate, which it calls a "digital entitlement". If you are upgrading from Windows 7 or Windows 8.1, Microsoft will check your current activation status -- not the product key. If you have a genuine copy, Microsoft will generate the entitlement for Windows 10 based on your PC's hardware.
Thus, no product key is generated or distributed. The Software Licensing Manager utility on each Windows 10 system will be able to retrieve the digital entitlement specific to that PC automatically. This works even if you wipe your hard drive completely. You won't have to enter any key when reinstalling Windows 10. Small hardware updates such as changing a hard drive, graphics card or RAM should not cause any change to the status of an entitlement. However, significant changes such as an upgraded motherboard will most likely cause the activation check for previously activated systems to fail, and users will need to call Microsoft's activation helplines or possibly purchase a new license.
If you buy a Windows 10 USB stick from Microsoft and use it on a wiped hard drive or on a new computer, you will have to generate a new entitlement by entering the key that comes with it.
However, since Microsoft hasn't officially detailed exactly how the new activation works, there are still several potential scenarios in which it is not clear how an entitlement status will be determined. In a statement to PC World, Microsoft clarified that "your activation product key stays with your PC," but did not elaborate on if the product key is tantamount to a "digital entitlement".