Windows Vista Hack Circulating

A group of notorious software pirates has hacked Windows Vista so that a stolen copy of the operating system can run as though it were a fully licensed and activated version, according to various Internet reports and blog posts Monday.

The hack, or "crack," as such techniques are sometimes called, was developed by the hacking group Pantheon. It's based on the fact that copies of Vista shipped in large volumes to PC manufacturers don't require full product activation, according to reports.

It wasn't immediately clear if the hack has been widely exploited.

Microsoft estimates that global piracy costs the software industry about $40 billion per year in lost sales. Of late, the company has been hunting down hackers and pirates more aggressively.

In December, Microsoft announced that a joint effort with the FBI and Chinese authorities helped bust up a major ring of software counterfeiters operating from the city of Guangdong in southern China. The gang was allegedly responsible for manufacturing and distributing more than $2 billion in fake Microsoft software, the company said.

Also last year, Microsoft announced lawsuits in six states against companies it accuses of participating in the gray market software trade. The suits were filed in federal courts in California, New York, New Jersey, Florida, Nevada, and Montana.

Unlike software pirates -- who illegally create and sell counterfeit copies of commercial software -- gray marketers profit by selling software in ways that violate the manufacturer's licensing terms.

Microsoft is drastically lowering its prices in some emerging markets -- in part to lower incentives to commit software piracy in areas of the world where the practice has become rampant. Microsoft last week said the price of boxed versions of Windows Vista will be reduced by almost half in some parts of Asia.