Joe Williams, general manager for Worldwide Genuine Windows at Microsoft, warned that the losses from software piracy are not just monetary.
"Consumers face potential identity theft, system failures and unrecoverable data loss," he said. "Market research firm IDC pegs the cost of compromised data in business environments at tens of thousands of dollars per incident."
Windows 7 will include new methods of protecting consumers from software piracy and malware infections, Williams explained, while ensuring that Microsoft's intellectual property rights are respected.
"As a software company, it is important for Microsoft to take a leadership role in fighting piracy. Customers want to know that they are using the genuine high-quality Microsoft product they paid for, and they want to know that their systems are more secure and that their software does not contain malicious code, " he said.
"Counterfeit software delivers a poor experience and impacts customer satisfaction with our products, particularly if users do not know that their software is non-genuine."
Williams gave the example of one piracy exploit that caused more than a million reported system crashes on machines running non-genuine Windows Vista before Microsoft was able to resolve it.
"Customers running genuine Windows Vista Service Pack 1 are protected from that experience. And there is an even simpler reason: if you pay for something, you want to know that you got what you paid for," he said.
"We see many cases of customers who wanted to buy genuine software and beli eved they did, only to find out later that they were victims of software piracy. We want to prevent that kind of thing in the first place."
Under the new regime users will be expected to validate their software in a much more precise way than before. Other Microsoft operating systems and anti-piracy measures, including Windows Genuine Advantage, allowed users to delay 'activation', but Windows 7 will make it harder to ignore repeated messages.
Williams also hinted at tools pitched at enterprises designed to improve and speed up company-wide systems authentication. "When customers see and use the tools we are providing to support Windows Vista and Windows 7 deployments, we think they will be impressed," he said.
Microsoft made available the final release candidate of Windows 7 on 6 May for the general public to test.