Microsoft on Tuesday said it will cease hobbling Windows Vista installations that fail the company's validation processes in its forthcoming Service Pack 1 update, scheduled for next year.

Currently, Microsoft penalizes Vista users who fail to activate their operating system software within 30 days, or three days after a major hardware configuration change, by restricting Vista to running in "out-of-grace reduced functionality mode." This denies access to games included in Window Vista and to premium features such as Aero Glass, ReadyBoost, and BitLocker. It also limits the amount of time the user can remain logged in to one hour.

A more restrictive state, "nongenuine reduced functionality mode," also may be imposed if Vista detects a blocked or counterfeit product key, or incorrect or modified activation binary files.

Microsoft characterized its decision as part of an effort to bolster its anti-piracy enforcement by disabling two types exploits used to bypass the Vista activation process. The company attributed the 5% growth of Windows desktop OEM revenue in the past quarter to declining piracy and noted that the piracy rate for Windows Vista is less than half of Windows XP.

"Although our overall strategy remains the same, with SP1 we're adjusting the customer experience that differentiates genuine from nongenuine systems in Windows Vista and later in Windows Server," said Michael Sievert, corporate VP for Windows Product Marketing, in an interview published on Microsoft's site. "Users whose systems are identified as counterfeit will be presented with clear and recurring notices about the status of their system and how to get genuine. They won't lose access to functionality or features, but it will be very clear to them that their copy of Window Vista is not genuine and they need to take action."

But Microsoft's elimination of the so-called Vista "kill switch" also looks a lot like a retreat, particularly in light of the difficulties the company has experienced telling legitimate customers from illegitimate ones. Back in August, Microsoft erroneously forced many new Vista customers into reduced functionality mode when its servers began rejecting activation attempts as a result of human error.

Alex Kochis, senior product manager of Windows Genuine Advantage, apologized for the mistake in a blog post, but the snafu prompted people to post comments like "Again, Microsoft is a master at shooting the customer in the foot."