A new report showing up at the Register shows that a team from Germany's Tecchannel has cracked the controversial Windows XP Product Activation feature. Tecchannel's entire report is available in English or in German.

From the Register article:

Since Microsoft introduced Windows Product Activation (WPA) the crackers have gone through a series of WinXP beta builds, finding new ways to at least circumvent the protection system. But now, taking an entirely different approach, Germany's Tecchannel has demonstrated that WPA as shipped in RC1 is full of gaping holes, and can be fooled almost completely.

What does this mean? Tecchannel's investigation shows that, at the very least, you can use the same wpa.dbl file to activate as many computers as you like, provided the RAM size is the same. A 'universal' file that didn't even require the same RAM might be a possibility, but it's more likely that people will simply swap files to get one appropriate for their hardware. If Microsoft doesn't change WPA before WinXP ships, then it's pointless. But changing it when RC2 is looming, and when the holes are so obviously huge, would be difficult.

We all knew this was coming eventually. No product, it seems, is completely uncrackable. With RC2 on its way, this should definitely make things very interesting for the boys and girls up in Redmond.