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What do we learn from KMS technology? An Artificial Intelligence.

by Sando Sasako
Contents

The Microsoft's MVP (Most Vetted Person)........................................................................................1


The Nasty Things.................................................................................................................................2

WHAT IS AN AI?................................................................................................................................4
Defining Artificial Intelligence............................................................................................................4
Purpose of Artificial Intelligence.........................................................................................................5
Human Intelligence Defined.................................................................................................................5
Self-Awareness.....................................................................................................................................6
Some Human-Age Creatures................................................................................................................6
Algorithm, A Messing Device to Human Intelligence.........................................................................7
Algorithm in Briefs...............................................................................................................................7
Algorithm, A Means for Logical Deduction........................................................................................8
The Binary System...............................................................................................................................8
Google's Algorithm..............................................................................................................................9

THE APPENDICES
TAP-9 Adapter to tame grueling MCIDs in dealing with KMS technology......................................10
Some crash log files............................................................................................................................14

How to troubleshoot the Key Management Service (KMS)...............................................................15


KMS Overview.......................................................................................................................15
KMS Host...............................................................................................................................15
KMS Client.............................................................................................................................17
What Does Support Ask For?.................................................................................................20

Windows 7: How to Rearm Microsoft Office 2010 to Extend Activation.........................................21


'Rearm' trick extends Office 2010 free ride to 180 days....................................................................23
Deploying Volume Activation for Office 2010..................................................................................25

The Microsoft Tool Kits.....................................................................................................................27


Three versions of MSTK compared.......................................................................................27
Office 2010 Toolkit Switches of Office Toolkits (2.1.2).......................................................27
Main Tab of Office Toolkits (2.1.2).......................................................................................27
Rearm.....................................................................................................................................27
AutoRearm.............................................................................................................................28
AutoRearm Tab of Office Toolkits (2.1.2).............................................................................28
What is KMS?........................................................................................................................28
AutoKMS...............................................................................................................................29
AutoKMS Tab of Office Toolkits (2.1.2)...............................................................................29
Paths Tab of Office Toolkits (2.1.2).......................................................................................29

How KMSAutoEasy v1.06v6 by Ratiborus feeds the KMS Server Emulator Service......................30
Dealing and Cracking Microsoft Office 2007....................................................................................34
Intelligence Defined...........................................................................................................................35
The PageRank Algorithm...................................................................................................................36
Artificial Intelligence: The Promise and The Peril.............................................................................37
WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

The Microsoft's MVP (Most Vetted Person)


by Sando Sasako
Jakarta, 4 May 2015

Microsoft has appointed me as an MVP (Most Vetted Person). Anyhoo, the status was given at once
some time ago in the past as I posted a blog entry on how to resolve the 30-day time bomb
embedded by Microsoft in its Office 2010 products. Take down notice was submitted by Microsoft
to Google. And, the last unforgiven act was as I posted a blog entry (early January 2015) detailing:
1. the sequencing files needed to update Windows 7.
2. the date of the update files released.
3. the size of the update files released.
4. the links of the update files reside.

As a result, within 6 hours and afterwards, MSFT (bing) bots were identified to have scrambled my
blog site as much as 12 times. Each of the links will be assessed inapproriate and be notified to
GOOG to be taken down from GOOG's SERP (Search Engine Result Pages), ASAP.

At the same time, MSFT has been doing it itself, through bing. Its (bing) bots have been using IE
9.0, not the latest and screwed IE 11.0. Yet, Windows Vista still is in place, and Windows 7, not
Windows 8 or Windows 8.1. Remarkable and splendid indeed !

After a while, my computer had been experiencing and under constant massive attacks by port
scanning activities. Crash after crash kept knocking down my computer. Some crash log files are
provided on Attachment 1. My firewall (ZoneAlarm) reported to have "... blocked traffic to port ...
on your machine from port 27554 on a remote computer whose IP address is 116.27.49.84. ..." The
list of IPs responsible to port scanning to my computer was incredible.

Then, I recalled an article titled by HACIENDA, a GCHQ Port Scanning Program on a wide-scale,
written by Pierluigi Paganini on 16 August 2014.
http://securityaffairs.co/wordpress/27598/hacking/hacienda-gchq-port-scanning.html

I responded such thing by posting an entry into my blog by mid September 2014, titled by Beating
down the port scanning of HACIENDA, the global internet surveillance program conducted by
intelligence agencies in 5 countries (US, UK, Canada, Australia, New Zealand).

While China (and Hong Kong) has been doing it since mid February 2000. The network/port
scanning policy was established and enforced by the Computing Services Centre (CSC) to take
disciplinary actions if 'unusual' or 'unauthorised' network or port scanning on either the University
network or sites outside the University has been detected. Depending on the type of users, the
responsible parties are to be penalised accordingly. http://www.cityu.edu.hk/csc/netcomp/sep2000-
7.htm

Before long, my computer had come to an end. The mainboard was sentenced to death. The
technician claimed that the processor does not have the electricity to power up. This is not the first
time I uncover the facts of the malfunctioning of hardware. The most easily burnt out devices have
been DVD writers. You can only burn CDs or DVDs in relatively a few limited numbers. That's not
about it. You can not boot through CDs/DVDs having an image of Windows operating system,
neither the bootable Windows operating system. The worst part is your CD/DVD drive won't eject
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and release CDs/DVDs having Microsoft products. You need a hammer and a screwdriver to
dismantle the device to rescue your CDs/DVDs.

I suspect nothing but Verify Class ID (verclsid.exe) as the main culprit of responsible to
malfunction the devices and computer parts.

The Nasty Things

Why MSFT has been doing such nasty things? Money. It is what matter most in this lifetime.
Microsoft tries to cashing in what it owns. Billions of US dollars has been poured to finance what
Microsoft wants to accomplish and fail. Each for every attempt what Microsoft has been taking
comes with a price. The .NET technology is one big mess, for example.

The flooding android-based smartphones all over the world has been crippling global computer
sales. So have been the sales of 2 most successful Microsoft Products worldwide, that is Windows
and Office. The offsprings of Windows-based computers (Windows 95) and Office 97 was
celebrated and praised much as it eases the use of spreadsheets, rather than (Lotus) 1-2-3 that
operating in DOS environments. At that time, the DOS-based 123 can only open 1 spreadsheet at a
time. There were many DOS versions operating. MS-DOS, PC-DOS, DR-DOS were to name a few.

The familiarity and all-in-one package office software provided by Microsoft has entangled users
and customers worldwide. Microsoft let the users, home and retail, to be accustomed by the menus,
shortcuts, features, and so on. Freely, almost. It was the strategy of Microsoft to beat Apple (APPL).
APPL has been selling its products exclusively since the beginning.

Oth, to tap the smartphone market, Google use the same old strategy applied by Microsoft. Google
will provide, supply, and enhance the (operating system) software, while the hardware and other
apps are open to anyone complied to Google APIs (Application Programming Interfaces) and the
similar ones developed by Google. Even so, Google has been alleged to stall and/or terminate the
operationalisation of Firefox Operating System in android-based smartphones.

Whatever and whoever the producers are, the existing smartphones are the most dumb gadgets that
worth to be dumped, and thrown away to the trash can. It cannot open the simple text-based files !
What a bump it is !

The sunsetting (desktop and laptop nowadays) computer hardware industry means the business has
no longer lucrative for Microsoft. MSFT has been trying in vain to fish the money in the clear water
(open internet). Its Windows Phones doomed. Its Surface flops. Most of its operating systems
(Longhorn (Windows 2003), Vista, Windows 8 and 8.1) drowned. Its OneNote is gigantic in size
and impractical. Its Outlook has never been brighter, but looming. Its Money has never been
exchanged. Its Project has never been implemented.

Today, what good is left with Microsoft but Windows XP (and Windows 7) and its basic Office
features? These two products are the most profitable cash cows of Microsoft. The question will be:
How much is the price the Microsoft has been tagging for its products and putting it on the shelves
at the moment?

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Nowadays, computer stores in Jakarta donot sell Microsoft Office 2010 anymore, but Microsoft
Office 2013. For Home and Student edition, it was tagged nearly by Rp 1 million per user. While
for Home and Business edition, it was priced by Rp 2.3 million. The bloated Windows 8 and
Windows 8.1 Professional is tagged by Rp 1.9 million, a bit higher than the Windows 7
Professional (Rp 1.8 million). But for its Windows 7 Ultimate, Microsoft is charging much higher,
that is by Rp 3.1 million.

To protect its revenue generation sources, Microsoft has initiated to launch an artificial intelligence,
to protect its interests. They call it the KMS. It was based on the XML technology. The XML
technology has been adopted and adapted while Longhorn in the development process. Microsoft
has been giving absolute protection to its newer operating systems, that is since the release of
Windows 8.

Users very much accustomed with Windows XP (desktop) environment and open access to folders
(of memory cards in andorid-based smartphones) are highly disappointed by Microsoft initiatives,
once again. Windows (Phone) users can only install apps by contacting and downloading the apps
from (Windows) Stores. Microsoft's desire in mimicking the exclusivity of Apple has been judged
to scorned and to no avail.
<hr>

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What is an AI?
by Sando Sasako
Jakarta, 5 May 2015

Defining Artificial Intelligence

Artificial Intelligence can be defined as an intelligence that was given, embedded, made, created to
some creature. By nature, such creature does not have the intelligence, nor can generate and build
one. Neither can the creature to improve one in terms of development, duplication, regeneration,
reconstruction, and so on, by default.

Russell and Norvig defined the AI as a creature that can perceive, understand, predict, manipulate a
world far larger and more complicated than itself, and build intelligent entities, that is the more
derived artificial Intelligences. Russell and Norvig compartmentalised AI into 4 categories, that is
by thinking and acting, humanly and rationally.1

mapping the AI.jpg

The thinking is concerned with thought processes and reasoning, whereas the acting addresses
behavior. The humanly measures success in terms of fidelity to human performance, whereas the
rationally measures against an ideal performance measure, called rationality. A rationality system is
rational as it does the "right thing," given what it knows.

1 Stuart J. Russell and Peter Norvig, Artifiial Intelligence: A Modern Approach, 3/e, Prentice Hall, New Jersey,

2010, p.1.
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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

A human-centered approach must be in part an empirical science, involving observations and


hypotheses about human behavior. A rationalist2 approach involves a combination of mathematics
and engineering.

Purpose of Artificial Intelligence

As the creature was given an intelligence by the human, such creature has an objective(s) to what is
sensed and perceived by the human (intelligence). The creature must have human intelligence. To
do so, most importantly, the creature must have some thing to 'do' with the aspects of human
intelligence.

Human senses or feels through the sensors received by human's 'devices', that not implanted but
created by the specialised cells that do their job descriptions. It was carried out within the DNA
soon after zygote experienced mitosis. It was not long after the sperm fertilised the ovum.

The five human senses are sight, hearing, touch, smell, and taste. As human is equipped with such
senses, the human is called sentient. While the sentience, according to Karam, means the ability to
feel and to experience perceptions-in other words, to experience the world through one's senses;
intelligence is defined as the ability to sense, experience, and decide what to do. In other words,
intelligence is defined as the ability to learn new things, to learn from experience, and to use this
knowledge to solve problems.3

Furthermore, some part of having intelligence is being able to make decisions, intelligent decisions,
humanly or rationally. What makes things complicated in the real life is that rational decisions
sometimes are intertwined with human conscience, vice versa. The decision trees are the heart of
expert system.

Human conscience means human values. And humanity values have been passed from generation to
generation, individually and/or socially. What makes human unique is the creativities in dealing
day-to-day activities in real life. Creativity in (human) artistry, language, literacy, music, can
generate ideas and innovations as well. Humour and the associated ones are the mighty examples.

Human Intelligence Defined

Human intelligence is the intellectual capacity of humans, which is characterized by perception,


consciousness, self-awareness, and volition. Intelligence enables humans to remember descriptions
of things and use those descriptions in future behaviors. It gives humans the cognitive abilities to
learn, form concepts, understand, and reason, including the capacities to recognize patterns,
comprehend ideas, plan, problem solve, and use language to communicate. Intelligence enables
humans to experience and think.4
2 By distinguishing between human and rational behavior, we are not suggesting that humans are necessarily
"irrational" in the sense of "emotionally unstable" or "insane." One merely need note that we are not perfect: not all
chess players are grandmasters; and, unfortunately, not everyone gets an A on the exam. Some systematic errors in
human reasoning are cataloged by Kahneman et al. (1982).
3 P. Andrew Karam, Science Foundations: Articial Intelligence, Chelsea House, New York, 2012, p.9.
4 Human intelligence http://en.wikipedia.org/wiki/Human_intelligence, 29 April 2015, at 20:10. See also

Evolution of human intelligence http://en.wikipedia.org/wiki/Evolution_of_human_intelligence; Salter W Sternberg RJ,


(1982). Handbook of human intelligence. Cambridge, UK: Cambridge University Press; N. J. Mackintosh (2011). IQ
and Human Intelligence (second ed.). Oxford: Oxford University Press.
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While self-awareness and volition have been the easy parts to be implanted on the creature right
from the start, from design to operational; the other 2 factors, perception-sentience and conscience,
have been the hardest parts. According to Macmillan English Dictionary, volition is defined as the
power or ability to decide something by yourself and to take action to get what you want. A more
usual word is will. For example, Did he come of his own volition?5

Self-Awareness

Self-awareness can be articulated by self-control. The control is binary based, Yes or No, Do This
or Donot Do This, Proceed or Stop. The third option is else, IF-THEN-ELSE. Then, there is the
control theory, intelligent control, the grandchild of cybernetics.

Proceed or continue means that there will be action(s) to be taken, work(s) to be done. The work(s)
can be mechanical and/or electrical, controlled and regulated by the sensory devices. The creatures
will behave in response to changes in the environment.

The mechanical creatures have been invented to ease human lives. They are to work or perform on
human's behalf. Some people name the human-age creatures by artifacts. Some people call it
automata, the mechanical beings that act (on their own), but do not think.6

Some Human-Age Creatures

1. A water clock with a regulator that maintained a constant flow rate. It was known as the first
self-controlling machine, built by Ktesibios of Alexandria (c. 250 B.C.).7
2. Antikythera devices (or mechanisms) was built to track the planet positions and moon
phases. It was built around 100 B.C.8
3. In ancient Greece, Hephaestus is known as the god of craftsmen and technology.
a. Hephaestus built metal automatons, including walking tripods, to help his work
and bring things back and forth from his home to Mount Olympus.
b. Hephaestus created human-like machines made of bronze to help him move from
place to place, according to Homer's epic poem The Iliad.
c. Talos, a giant man made of bronze, Talos was responsible for protecting the
island of Crete from pirates and other invaders. He would circle the island
three times each day to do so.
4. Pygmalion, a sculptor, fell in love with one of his creations. This creation is brought to life
by the goddess Venus.
5. Yan Shi, a craftsman, made an automaton, a mechanical man for the emperor. It acted just
like a person. It was so lifelike as it was able to walk, sing, wink at the ladies of the royal
court. It happened in ancient China, more than 2,000 years ago.
6. In Jewish legends, a golem was a man made of clay that was brought to life, by Judah Loew
ben Bezalel (1520-1609) of Prague, through rituals and magic. It was created to protect
the Jews of the city from attack. However, it became more and more violent and could
5 Volition, Macmillan English Dictionary for Advanced Learners, 2007.
6 P. Andrew Karam, Science Foundations: Articial Intelligence, Chelsea House, New York, 2012, p.9.
7 Other examples of self-regulating feedback control systems include the steam engine governor (James Watt,

1736-1819), the thermostat (and submarine, Cornelis Drebbel, 1572-1633. These inventions create the mathematical
theory of stable feedback systems. Stuart J. Russell and Peter Norvig, Artifiial Intelligence: A Modern Approach, 3/e,
Prentice Hall, New Jersey, 2010, p.15.
8 P. Andrew Karam, Science Foundations: Articial Intelligence, Chelsea House, New York, 2012, p.9.

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

not be controlled. It finally was stopped when the rabbi was able to erase the first letter of
a word written on the golem's forehead. The rabbi changed the word from emet (Hebrew
for "truth") to met (Hebrew for "death").

Some people claim that:


1. the golem was not an automaton,
2. the golem was not an intelligent,
3. the golem was a creature that acts not intelligently,
4. the golem behaved like a chaotic animal, as it started acting on its own.

Algorithm, A Messing Device to Human Intelligence

To do with human intelligence means to mess with the human intelligence, to cope with the human
intelligence, to reproduce aspects of human intelligence, to replicates all key aspects of human
intelligence, and so on.

In doing so, the creature must have some 'thing' in hand to deal with the human intelligence. That
'thing' is called value. In human terms, it is called preferences. It can be right or wrong, the
boundaries, chances, triggers, rules, directives, and so on. Some times, to humans, the preferences
can not be clear-cut. Rational decisions sometimes are intertwined with human conscience, vice
versa.

In computing, the thing is called algorithm. Macmillan English Dictionary defines it as a set of rules
for solving problems or doing calculations, especially rules that a computer uses. Nevertheless,
algorithms are also implemented by other means, such as in a biological neural network (for
example, the human brain implementing arithmetic or an insect looking for food), in an electrical
circuit, or in a mechanical device.9

Algorithm in Briefs

The concept of algorithm has existed for millenias. A partial formalization, that become the modern
algorithm, began with attempts to solve the Entscheidungsproblem (the "decision problem") posed
by David Hilbert in 1928. Subsequent formalizations were framed as attempts to define "effective
calculability" or "effective method". The algorithm formalisations included
1. the Gdel-Herbrand-Kleene recursive functions of 1930, 1934 and 1935,
2. Alonzo Church's lambda calculus of 1936,
3. Emil Post's "Formulation 1" of 1936, and
4. Alan Turing's Turing machines of 1936-7 and 1939.

In mathematics and computer science, an algorithm can be defined as a self-contained step-by-step


set of operations to be performed. The operations include calculation, data processing, and
automated reasoning. Algorith limits what could be done with logic and computation. It is an
effective method as it confines:
1. a finite amount of space and time to do the operations,
2. a finite number of well-defined successive states, eventually
3. producing "output", and
4. terminating at a final ending state.
9 Algorithms http://en.wikipedia.org/wiki/Algorithm.
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The transition from one state to the next is not necessarily deterministic; some algorithms, known as
randomised algorithms, incorporate random input. There may also other algorithms take places such
as genetic algorithms, learning algorithms, etc.

Algorithm, A Means for Logical Deduction

Algorithms for logical deduction were applied and


formalised in general mathematical reasoning. Logic,
computation (mathematical formalisation), and probability
are the three fundamental areas of AI. In 1847, George
Boole (1815-1864) worked out the details of propositional,
or Boolean, logic. In 1879, Gottlob Frege (1848-1925)
extended Boole's logic to include objects and relations,
creating the first-order logic that is used today. Alfred Tarski
(1902-1983) introduced a theory of reference that shows
how to relate the objects in a logic to objects in the real
world.

The term algorithm comes from al-Khowarazmi, a Persian


mathematician of the 9th century, whose writings also
introduced Arabic numerals and algebra to Europe; while
the first nontrivial algorithm is thought to be Euclid's
algorithm for computing greatest common divisors of two
numbers, a and b in locations named A and B.

The Euclid algorithm (c. 300 B.C) proceeds by successive


subtractions in two loops: IF the test B >= A yields "yes" (or
true) (more accurately the number b in location B is greater
than or equal to the number a in location A) THEN, the
algorithm specifies B <- B - A (meaning the number b - a
replaces the old b). Similarly, IF A > B, THEN A <- A - B.
The process terminates when (the contents of) B is 0,
yielding the g.c.d. in A. (Algorithm derived from Scott
220px-Euclid_flowchart_svg.png 2009:13; symbols and drawing style from Tausworthe
1977).

The Binary System

Before there is an ELSE, the option only confines to Yes or No, 0 or 1, the binary system. The
binary number system was invented by Leibniz, along with calculus, a number of different
mechanical calculators. Gottfried Wilhelm Leibniz (1646-1716), a German mathematician and
philosopher, did surpass Pascal by building a calculator that could add, subtract, multiply, and take
roots, whereas the Pascaline could only add and subtract.10

10 Stuart J. Russell and Peter Norvig, Artifiial Intelligence: A Modern Approach, 3/e, Prentice Hall, New Jersey,

2010, p.1.
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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Leibniz built a mechanical device intended to carry out operations on concepts rather than numbers,
but its scope was rather limited. Leibniz thought it would be possible to calculate equations applied
to basic human problems and thoughts. Leibniz also tried to develop a "calculus of reason." This
type of math was based on his belief that it would be possible to use formulas to represent human
thought. If Leibniz were correct, then we could easily make machines that could think.11

To analyse and differentiate the exact 0 or 1, Countess Ada Lovelace (1815-1852) put the world's
first programming language to run on Babbage's Difference Engine No.1. At that time, it was the
world's most advanced calculating devices created by Charles Babbage (1791-1871), a British
mathematician and inventor. He first conceived the idea of an advanced calculating machine to
calculate and print mathematical tables in 1812, as a way to eliminate inaccuracies associated with
compiling mathematical tables by hand. It was a decimal digital machine-the value of a number
represented by the positions of toothed wheels marked with decimal numbers.

Google's Algorithm

<hr>

11 P. Andrew Karam, Science Foundations: Articial Intelligence, Chelsea House, New York, 2012, p.9
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TAP-9 Adapter to tame grueling MCIDs in dealing with KMS technology


by Sando Sasako
Jakarta, 26 April 2015

My latest problem encounters with Microsoft Office 2010 products was firstly identified as
Microsoft Outlook failed to open. After some time, Microsoft Office 2010 will check your
activation on every startup through KMS. If the count becomes zero (0 rearms), the license files are
then marked as shot, tampered, or damaged. Soon, the KMS client (or your Windows operating
system) will notify you that the KMS Server Emulator Service was closed. This will be displayed
twice. Two windows.

closed- kms server emulator service.jpg

(MSO2010) Setup window will appear on every start of Office. Then, there will be the red bar and
nag. Retail versions of Office 2010 will run in Reduced Functionality Mode (RFM) after the grace
period (of 30 days) has been exceeded. In RFM Office, documents can only be viewed but not
modified. Volume editions of Office 2010 don't have an RFM. However, Office will start nagging
users with messages after 25 days. You can just imagine how many helpdesk calls will provoke if
you don't ensure that Office 2010 has been activated during this grace period.

The only way to resolve this is to activate Office 2010 successfully (You'll have to use KMS due to
lack of MAK/Retail keys). If success, you'll be activated with 5 rearms. You can make Office 2010
repair itself with the toolkit but you'll have to activate to get out of notifications mode. Usually the
repair can make KMS activation work if it failed before AND was not the fault of AV.
http://www.filmskimaraton.com/showthread.php?t=2064

Older Office Toolkits (v.2.1.3) provide options to repair and change your license files from retail to
volume or other, vice versa. The repair button in Office Toolkit will deletes all licensing
information for Office 2010. You will have to activate and can use KMS Keygen. This is a last
resort and should be used sparingly unless using EZ-Activator.

As Microsoft has identified your Client Machine IDs (CMIDs) to have installed their products
illegally, Microsoft will mark your license details to be tampered or corrupted. This will force

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Office 2010 to repair itself and your Microsoft Office products will be in either Notifications Mode
(VL) or Reduced-Functionality Mode (Retail).

mstk2.1.3 lic files repair.jpg

When Office 2010 repairs itself, it restores licenses for what you have physically installed; any
Licenses added/converted using License Add or EZ-Activator will not be restored. You will
probably not be able to rearm to get out.

Uninstall MSO-2010 dan reinstall it again on existing operating system won't solve your problem.
Even if you are restoring previous (Windows XP) system images in the past created by PowerQuest
Drive Image 2002 [(or Paragon Drive Copy Professional 11 Special Edition + Recovery CD for
(Windows 7 and newer), untested] or (Paragon Hard Disk Manager 14 Suite 10.1.21.136 + Boot
Media Builder, untested).

Newly created Office Toolkits (2.5.3) (and KMSpico) won't solve your problems. Neither changing
VL to retail and vice versa. The Visio Premium (VL) was not covered by Office Toolkits (2.0.1 and
2.1.3). Uninstall Visio Premium VL won't either.

KMS Activation/EZ-Activator (Try License Repair+Run EZ-Activator a few times before this):
1. Be absolutely 100% positive no AV/Firewall/Security are interfering. Test activation with
all of them disabled and exclusions properly added.
2. If activation outright will not work, enable Verbose Check Activation in Settings.
3. Run EZ-Activator and copy the output 100% as displayed and save it to a textfile if it fails.
4. Run Check Activation Status and copy the output 100% as displayed and append it to the
textfile from step 3.
5. Post the contents of that textfile to pastebin.org or similar site and post in Office 2010
Toolkit and EZ-Activator thread stating you had KMS problems and post a link to that
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log. You may have to obsfucate it (hxxp:// instead of http:// )if your post count is too low
to post links).

err0xC004f074.jpg

After tinkering enough to mess up the KMS systems with Office Toolkits, IORRT, online activation
attempts, KMSpico, WOAT (Windows Office Activation Toolkit) v4.0 B2, and KMSAuto Easy
1.06.V6, finally, my KMS client stopped acting weirdo.

I am also learnt to have deleted the whole MSO Cache thing folder and whatever files inside the
System Volume Information foder (use miniPE-XT or the like), turn off the System Restore,
bleaching the bits (BleachBit), chkdsk c:/f/r/x, defragmenting.

Make sure the notorious Microsoft files donot have access to the internet, ultimately the Windows
Update programs. Some MSFT files are given internet access by default by the firewall (programs)
(ZoneAlarm). They are:
1. Application Layer Gateway service (alg.exe).
2. Generic Host Process for Win32 Services (svchost.exe)
3. COM Surrogate (dllhost.exe)
4. Microsoft Console Based Script Host (cscript.exe)
5. Microsoft Resource File To COFF Object Conversion Utility (cvtres.exe)
6. Net Command (net.exe and net1.exe)
7. Network Command Shell (netsh.exe)
8. Registry Console Tool (reg.exe)
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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

9. Run a DLL as an App (rundll32.exe)


10. Spooler SubSystem App (spoolsv.exe)
11. Verify Class ID (verclsid.exe)

<hr>

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Attachment 1
Some crash log files
================================================ ================================================
Dump File : Filename : hal.dll
Crash Time : Address In Stack : hal.dll+26e0
Bug Check String : DRIVER_IRQL_NOT_LESS_OR_EQUAL From Address : 0x806ee000
Bug Check Code : 0x100000d1 To Address : 0x8070e380
Parameter 1 : 0x0000002c Size : 0x00020380
Parameter 2 : 0x00000002 Time Stamp : 0x47f3693c
Parameter 3 : 0x00000001 Time String : 2008-04-02 06:08:44 PM
Parameter 4 : 0xb2673a8c Product Name : Microsoft Windows Operating System
Caused By Driver : tcpip6.sys File Description : Hardware Abstraction Layer DLL
Caused By Address : tcpip6.sys+23a8c File Version : 5.1.2600.5574 (xpsp_sp3_qfe.080402-1256)
File Description : IPv6 driver Company : Microsoft Corporation
Product Name : Microsoft Windows Operating System Full Path : C:\WINDOWS\system32\hal.dll
Company : Microsoft Corporation ================================================
File Version : 5.1.2600.5935 (xpsp_sp3_qfe.100211-1426)
Processor : 32-bit ================================================
Crash Address : tcpip6.sys+23a8c Filename : ntoskrnl.exe
Stack Address 1 : tcpip6.sys+252ed Address In Stack : ntoskrnl.exe+c807
Stack Address 2 : tcpip6.sys+21faa From Address : 0x804d7000
Stack Address 3 : tcpip6.sys+36be To Address : 0x806edb00
Computer Name : Size : 0x00216b00
Full Path : C:\WINDOWS\Minidump\ Time Stamp : 0x4b7a94f1
Processors Count : 1 Time String : 2010-02-16 07:52:01 PM
Major Version : 15 Product Name : Microsoft Windows Operating System
Minor Version : 2600 File Description : NT Kernel &amp; System
Dump File Size : 118,784 File Version : 5.1.2600.5938 (xpsp_sp3_qfe.100216-1510)
Dump File Time : Company : Microsoft Corporation
================================================ Full Path : C:\WINDOWS\system32\ntoskrnl.exe
================================================
================================================
Filename : afd.sys ================================================
Address In Stack : afd.sys+103a4 Filename : tcpip6.sys
From Address : 0xb25ae000 Address In Stack : tcpip6.sys+23a8c
To Address : 0xb25cfd00 From Address : 0xb2650000
Size : 0x00021d00 To Address : 0xb2687640
Time Stamp : 0x48f758cd Size : 0x00037640
Time String : 2008-10-16 10:07:57 PM Time Stamp : 0x4b73ebd1
Product Name : Microsoft Windows Operating System Time String : 2010-02-11 06:36:49 PM
File Description : Ancillary Function Driver for WinSock Product Name : Microsoft Windows Operating System
File Version : 5.1.2600.5695 (xpsp_sp3_qfe.081016-1735) File Description : IPv6 driver
Company : Microsoft Corporation File Version : 5.1.2600.5935 (xpsp_sp3_qfe.100211-1426)
Full Path : C:\WINDOWS\system32\drivers\afd.sys Company : Microsoft Corporation
================================================ Full Path : C:\WINDOWS\system32\drivers\tcpip6.sys
================================================

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Attachment 2
How to troubleshoot the Key Management Service (KMS)
https://technet.microsoft.com/en-us/library/ee939272.aspx

As part of deployment, many enterprise customers set up the Key Management Service (KMS) to enable activation of Windows in their environment.
It is a simple process to set up the KMS hostand the KMS clients discover and attempt to activate on their own. But what happens if it doesn't
work? What do you do next? The most common issues seen by our customers (and how to resolve them) are outlined in the Volume Activation
Operations Guide, under Volume Activation Troubleshooting (https://technet.microsoft.com/en-us/library/dd772270.aspx#EZH). This blog will walk
you through the resources you need to troubleshoot, while the information in the Guide starts with the problem to be solved and the possible ways to
fix it. The details of event log entries and the SLMGR.vbs script can be found in the Volume Activation Technical Reference Guide
(http://go.microsoft.com/fwlink/?LinkId=152550).

On This Page
KMS Overview
KMS Host
KMS Client
What Does Support Ask For?s
Conclusion

KMS Overview
Let's start with a quick refresher on KMS activation. KMS is a client - server model. It is conceptually similar to DHCP. Instead of handing out IP
addresses to clients on their request, KMS enables product activation. KMS is also a renewal model, with the clients attempting to reactivate on a
regular interval. There are two roles: the KMS host and the KMS client.
The KMS host runs the activation service and enables activation in the environment. The KMS host is the system where you will need to install a key
(the KMS key from the Volume License Service Center (VLSC)) and then activate the service. The service is supported on Windows Server 2003,
Windows Vista, Windows 7, Windows Server 2008, or Windows Server 2008 R2.
The KMS client is the Windows operating system that is deployed in the environment and needs to activate. KMS clients can be running any edition
of Windows that uses Volume Activation. These include the editions of Windows available to our volume license customers: Windows 7, Windows
Vista, Windows Server 2008 R2, and Windows Server 2008. The KMS clients come with a key pre-installed, called the Generic Volume License Key
(GVLK) or KMS Client Setup Key. The presence of the GVLK is what makes a system a KMS client. The KMS clients find the KMS host via a DNS
SRV record (_vlmcs._tcp) and then automatically attempt to discover and use this service to activate themselves. When in the 30 day Out of Box
grace period, they will try to activate every 2 hours. Once activated, the KMS clients will attempt a renewal every 7days.
From a troubleshooting perspective, you may need to look at both sides (host and client) to determine what is going on.

KMS Host
There are two areas of check on the KMS host. First, you'll want to check the status of the software license service on the host. Second, look in the
Event Viewer.
SLMGR.VBS
From an elevated command prompt, type SLMGR.vbs /dlv. This will give you verbose output of the Software Licensing service. The screenshot
below is from one of our KMS hosts within Microsoft.

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KMS SLMGR Output

IC368860.png

The most important fields for troubleshooting are listed below. What you are looking for may be different, depending on the issue to be solved.
Version Information. At the top of the SLMGR.vbs /dlv output is the Software Licensing Service Version. This may be useful to determine if the
current version of the service is installed. For example, updates to the KMS service on Windows Server 2003 support different KMS host keys. This
data can be used to evaluate whether or not the version is current and supports the KMS host key that you are attempting to install. See KB968195
(http://support.microsoft.com/kb/968915) for more information on these updates.
Name. This will tell you the edition of Windows that is installed on the KMS host system. This can be important when troubleshooting if you are
having trouble adding or changing the KMS host key (e.g. to confirm the key is supported on that OS edition).
Description. This is where you will see the key that is installed. Use this field to confirm which key was used to activate the service and whether or
not it is the right one for the KMS clients that you have deployed.
License Status. This is the status of the KMS host system. This should be Licensed. Anything but that means something is wrong and the host may
need to be reactivated.
Current Count. The count displayed will be between 0 and 50. The count is cumulative (between operating systems) and contains the number of valid
systems that have attempted to activate within a 30 day period. If the count is 0, it is a newly activated service or no valid clients have connected to
the KMS host. The count will not increase above 50, no matter how many valid systems exist in the environment. This is because they count is set to
cache only 2 times the maximum license policy returned by a KMS client. The maximum policy today is set by the Windows client OS, which
requires a count of 25 or higher from the KMS host to activate itself. Therefore, the highest count on the KMS host is 2 x 25, or 50. Note that in
environments with only Windows Server KMS clients, the maximum count on the KMS host will be 10, as the threshold for server is 5 (2 x 5, or 10).
A common issue related to count is where the environment has an activated KMS host and a sufficient number of clients, but the count does not
increase beyond 1. The core problem is that the deployed client image was not configured correctly (sysprep /generalize) and the systems do not have
unique Clint Machine IDs (CMIDs). See the KMS Client section (below) and KB929829 (http://support.microsoft.com/kb/929829) for more info.
This has also been blogged (http://blogs.technet.com/askcore/archive/2009/10/16/kms-host-client-count-not-increasing-due-to-duplicate-cmid-s.aspx)
by one of our Support Escalation Engineers. Another reason why the count may not be increasing is that there are too many KMS hosts in the
environment and the count is distributed over all of them.
Listening on Port .Communication with KMS is via anonymous RPC. 1688 is the default TCP port used by the clients to connect to the KMS host.
Make sure this port is open between your KMS clients and the KMS host. The port can be changed and can be configured on the KMS host. The
KMS clients receive this port designation from the KMS host during their communication. If you change the port on a KMS client, it will be
overwritten when that client contacts the host.
We often get asked about the "cumulative requests" section of the SLMGR.vbs /dlv output. Generally speaking, this data is not all that helpful when it
comes to troubleshooting. The KMS host will keep an ongoing record of the state of each KMS client that attempts to (re)activate. Failed requests
indicate KMS clients that are not supported by the KMS host. For example, if a Windows 7 KMS client attempted to activate against a KMS host
activated with a Windows Vista KMS key, the activation would fail. The "Requests with License Status" lines cover all of the possible license states,
past and present. From a troubleshooting perspective, this data will only be relevant if the count is not increasing (as expected). In that case, you
should see the failed requests increasing and will know to check the product key used to activate the KMS host system. Note also that the values here
will not reset unless the KMS host system is reinstalled.

Event Viewer

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Below you will see a snippet from the Key Management Service event log of our KMS host. This event, 12290, shows that a KMS client contacted
the host in order to attempt activation. There will be a 12290 entry in the Key Management Service log on the KMS host system for each client that
attempts to activate. If you don't see this event for a client that you are troubleshooting, that client is not connecting to the KMS host. There are two
corresponding events on the KMS clients, 12288 and 12289, which will be covered in the KMS Client section. Some of the reasons why a 12290
event may not exist:
Network outage
Host not resolving/registered in DNS
Firewall blocking TCP 1688. This can happen in many places within the environment, including on the KMS host system itself. By default, the
exception for KMS exists in the firewall configuration dialog. However, it is not enabled automatically. You will need to turn on the exception.
Log full

The 12290 event entry gives a significant amount of information that can be used to figure out what kind client contacted the hostand why a failure
may occur.

KMS 12290 Event

IC368861.png

In the event entry, you will find the following relevant information:
Minimum count needed to activate. The KMS client is reporting that the count from the KMS host must be 5 in order to activate. That means this is a
Server OS, though whether it is Windows Server 2008 or Windows Server 2008 R2 will not be clarified, nor will the specific edition. If your clients
are not activating, make sure that the count is sufficient on the host.
Client Machine ID (CMID). This is a unique value per system. If this is not unique it is because an image was not properly prepared for distribution
(sysprep /generalize). This will manifest on the KMS host as a count that will not increase, despite a sufficient number of clients existing in the
environment. See KB929829 (http://support.microsoft.com/kb/929829) for more info.
License State and Time to State Expiration. This is the license state that the client currently has. It can help you differentiate a client that is trying to
activate for the first time versus one that is attempting to reactivate. The time entry will tell you how much longer the client will be in that state, if
nothing changes.

Another relevant event to look for on your KMS is the 12293. This event indicates that the host failed to publish the required records in DNS. That
will definitely cause failures and is something you should confirm after settting up your host and before deploying clients.

KMS Client
On the clients you will also use the same process (SLMGR and Event Viewer) to troubleshoot activation.

SLMGR.VBS
From an elevated command prompt, type SLMGR.vbs /dlv. This will give you verbose output of the Software Licensing service. The screenshot
below is from my machine, a KMS client within Microsoft.

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KMS Client SLMGR Output

IC368862.png

The most important fields for troubleshooting are listed below. What you are looking for may be different, depending on the issue to be solved.
Name. This will tell you the edition of Windows that is installed on the KMS client system. Use this to confirm that the version of Windows you are
attempting to activate can use KMS. For example, our help desk has seen incidents where customers are attempting to install the KMS Client Setup
Key on an edition of Windows that does not use volume activation, such as Windows Vista Ultimate.
Description. This is where you will see the key that is installed. VOLUME_KMSCLIENT indicates that the KMS Client Setup Key (or GVLK) is
installed (default for volume license media) and that this system will automatically attempt to activate using a KMS host. If you see something else
here, such as MAK, then you'll need to reinstall the GVLK for this system to be a KMS client. You can do that manually (slmgr.vbs /ipk <GVLK>) or
use the Volume Activation Management Tool (VAMT). VAMT is part of the Windows AIK.
Partial Product Key. As with the Name field above, you can use this information to determine that the correct KMS Client Setup Key is installed on
this machine (e.g. matches the operating system that is installed on the KMS client). By default, the correct key will be present on systems built using
media from the Volume License Service Center (VLSC) portal. In some cases, customers may use Multiple Activation Key (MAK) activation until
there are a sufficient number of systems in the environment to support KMS activation. The KMS Client Setup key will need to be installed on these
systems to transition them from MAK to KMS. VAMT can be used to install this key and ensure the correct one is applied.
License Status. This is the status of the KMS client system. This should be Licensed for a system that has been activated with KMS. Anything but that
may indicate there is a problem. For example, if the KMS host is good and the KMS client will not activate (e.g. in a Grace state) then there may be
something preventing the client from reaching the host system (such as firewall issues, network outage, etc.).
Client Machine ID (CMID). The CMID should be a unique value per KMS client. As I mentioned in the KMS host section, a common issue related to
count is where the environment has an activated KMS host and a sufficient number of clients, but the count does not increase beyond 1. See
KB929829 for more info.
KMS Machine Name from DNS: Here is where you will find the FQDN of the KMS host that the client successfully activated with and the TCP port
used for the communication.
KMS Host Caching. The final entry is to show whether or not caching is enabled. It is by default. What this means is that the KMS client will cache
the KMS host that it was able to activate with and will communicate directly with this host when it is time to reactivate (instead of querying DNS). If
the client cannot contact the cached KMS host, discovery with DNS will be used.

Event Viewer
Below you will see a snippet from Application event log from my machine. A successful activation/reactivation on the client will have two events,
12288 and 12289. If you only see the 12288 event (without a corresponding 12289) it means that the KMS client was not able to reach the KMS host
or it did not respond/response was lost. In this case, confirm that the KMS host is discoverable and reachable by the KMS client systems.

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Client 12288

IC368863.png

In the 12288 event entry, the most relevant piece of information is data in the Info section. For example, the FQDN and TCP port used by the client to
attempt activation is shown, along with the current state of the client. The FQDN can also help to troubleshoot cases where the count on a KMS host
is not increasing. For example, if there are too many KMS hosts available to the clients (either legitimate or rogue systems) then the count may be
distributed over all of them.
An unsuccessful activation will not always mean that the client has 12288 and not 12289. A failed activation/reactivation may also have both events.
This is where you need to examine the second event to confirm the reason for the failed attempt.

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Client 12289

IC368864.png

In the 12289 event entry, the Info section is also where you will look to find what you need:
Activation Flag. This will be a 1 (successful) or 0 (failure) on the attempt.
Current Count on the KMS Host. The client will log the count received by the KMS host. If activation fails, it may be because the count is not
sufficient for this client OS or that there are not enough systems in the environment to build the count.

What Does Support Ask For?


If you end up needing to call support to troubleshoot activation, they will typically ask for the data:
Slmgr.vbs /dlv from the KMS host and KMS client systems. The Slmgr.vbs output can be copied (whether using wscript or cscript) using ctrl-C and
pasted into Notepad before sending to the support contact.
Event logs from both KMS host (Key Management Service log) and KMS client systems (Application log)

Conclusion
Hopefully the breakdown of the information available to help troubleshoot KMS activation has been helpful. Going forward, visit our TechCenter on
Springboard (http://www.technet.com/volumeactivation). Be on the lookout for more blogs/podcasts to help answer the more common questions and
issues from our customers, both here, Ask the Core Team blog, and on our Genuine Windows Blog. Thank you for your attention!
<hr>

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Attachment 3
Windows 7: How to Rearm Microsoft Office 2010 to Extend Activation
http://www.sevenforums.com/microsoft-office/23436-how-rearm-microsoft-office-2010-extend-activation.html
aznkid25, 03 Sep 2009

Source http://www.mydigitallife.info/2009/09/04/how-to-rearm-and-extend-office-2010-activation-grace-period-for-free-180-days-usage/

Go to Control Panel -> Administrator Tools -> Services, or type services.msc in Start Search.
Stop the Office Software Protection service.
Open a Command with elevated privileges.
Run the OSPPRUN.exe with the following command:
%SystemDrive%:\Windows\System32\OSPPRUN.exe

Where %SystemDrive% is normally C: or other drive letter that Windows is installed on.

A new prompt will come out. Enter the following commands which precede with > one by one, each follows by Enter:
> Initialize

> Open

> GetInstalledSkuIds

Above command will return the following result, where the application ID number 0 represents AppID for Office 2010:

0. 128a057a-7e95-4063-b296-c54c5f3d3f3a
1. 26adec89-edf3-4adc-a3fc-c865f1a9f71f

OK.

> GetInstalledAppIds 128a057a-7e95-4063-b296-c54c5f3d3f3a

Above command will return result similar to below:

0. 59a52881-a989-479d-af46-f275c6370663

OK.

> GetLicensingStatus 59a52881-a989-479d-af46-f275c6370663 128a057a-7e95-4063-b296-c54c5f3d3f3a

Above command will return the following output, where dwGraceTime is a DWORD value that holds the grace period before the software will stop
working and require activation:

SkuId = 128a057a-7e95-4063-b296-c54c5f3d3f3a
eStatus = SL_LICENSING_STATUS_IN_GRACE_PERIOD
dwGraceTime = 1D 23:37
dwTotalGraceDays = 30 days
hrReason = 4004F00C
qwExpiration = 2010/10/31

OK.

In the same prompt, run the following commands (which basically set AppID and SkuID for Office 2010 to enable free 30 days usage before
activation), each follows by Enter, to rearm Microsoft Office 2010 to reset, prolong and extend activation grace period for additional 30 days:
> Rearm 59a52881-a989-479d-af46-f275c6370663 128a057a-7e95-4063-b296-c54c5f3d3f3a 1

OK.

Note: Mostly the IDs are the same for similar Office 2010 installation. If your APP ID and/or SKU ID is different, please change accordingly.

> Close

> Initialize

> Open

Note: "Close" command is import to stop the Office Software Protection service (which can also be stopped via Service.msc interface) after rearming
and before reinitialize of license data (The activation countdown timer or license requires a service reinitialization or restart to update), or else
"Unlicensed" license status with timer at 0 error may occur.

To verify that the Office 2010 rearm is successful, and to check how many days left in activation grace period before activation is required, use the
following command, follows by Enter (replace IDs if different):
> GetLicensingStatus 59a52881-a989-479d-af46-f275c6370663 128a057a-7e95-4063-b296-c54c5f3d3f3a
21
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SkuId = 128a057a-7e95-4063-b296-c54c5f3d3f3a
eStatus = SL_LICENSING_STATUS_IN_GRACE_PERIOD
dwGraceTime = 29D 23:37
dwTotalGraceDays = 30 days
hrReason = 4004F00C
qwExpiration = 2010/10/31

dwGraceTime will show the remaining time available to use Office 2010 for free without activation.

Quit the OSPPRUN prompt with following command, follows by Enter:


> Quit

Tip 1: To check how many rearms that is remaining, use the following command:

> GetApplicationInformation 59a52881-a989-479d-af46-f275c6370663 RemainingRearmCount

(DWORD, []) 59a52881-a989-479d-af46-f275c6370663 = 4

OK.

After one rearm of Office 2010, 4 rearms is still possible, to extend the free (evaluation or trial) free usage of Office 2010 to 180 days (6 months or
half a year), taking into account the initial 30 days activation free period before first ream is performed.

Tip 2: To check and show how many rearms of Office 2010 have been performed, use the following command:

> GetApplicationInformation 59a52881-a989-479d-af46-f275c6370663 RearmCount

(DWORD, []) 59a52881-a989-479d-af46-f275c6370663 = 1

OK.
<hr>

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Attachment 4
'Rearm' trick extends Office 2010 free ride to 180 days
Microsoft confirms supported command extends activation-free grace period
http://www.computerworld.com/article/2516549/desktop-apps/-rearm--trick-extends-office-2010-free-ride-to-180-days.html
By Gregg Keizer
Computerworld | May 14, 2010 4:54 PM PT

Office 2010 can be used for up to 180 days without providing a product activation key, Microsoft confirmed today.

Although Microsoft generally touts a 30-day time limit for users to activate their copies of the company's software, including Windows, a little-known
command designed for corporate administrators can be used by anyone to "reset" the Office 2010 countdown up to five times.

The company confirmed that a short command, which is documented on its TechNet support site, resets the activation timer in Office 2010, which
officially launched Wednesday
(http://www.computerworld.com/s/article/9176804/%20http://www.computerworld.com/s/article/9176636/Update_Office_SharePoint_2010_launch_
brings_Microsoft_to_cloud) but won't reach retail shelves until June 15. Companies with volume license agreements can get Office 2010 now.

Microsoft typically allows users to install and run Office or Windows for up to 30 days without requiring a product activation key, the 25-character
string that proves the copy is legitimate. During the 30-day grace period, the software works as if it has been activated. As the grace period shrinks,
however, messages appear on the screen reminding the user to activate the product.

In Office 2010, the messages change on the 25th day after installation. At some point, the Office 2010 title bar also turns red.

But by running a file named "ospprearm.exe," users can reset the time-until-activation to 30 days. The file is located in the folder "%installdir
%\Program Files\Common Files\Microsoft Shared\OfficeSoftwareProtectionPlatform," where ""%installdir%" is "C:" on most machines.

The technique, dubbed "rearm" as a nod to the command used in Windows, can be used up to five times. If users perform the rearm at the end of each
30-day period, they can run Office 2010 for a total of 180 days without having to supply an activation key.

According to a Microsoft spokeswoman, who replied to questions via e-mail, the rearm feature is aimed at enterprise administrators who use a single
copy, or "image," to deploy a supported operating system and accompanying software on hundreds or thousands of PCs.

As IT administrators prepare the image, however, the activation clock continues to tick down. By the time the image is copied to a company machine,
the counter may have reached the point where the activation messages appear.

"Say you have another 500 computers you want to deploy six months from now," the Microsoft spokeswoman said. "You want to use the same image
[as before]. The problem here is that Office is smart enough to know that you [first] installed Office in May, but now it's November. So when users
first boot up Office, they see the red title bar telling them they haven't activated. This is not a good user experience."

Rearm lets administrators build the image, then as a final step, reset the activation grace timer. "Now, whenever the administrator has new computers
coming in, he can just deploy that image. When users start Office for the first time, the grace timer begins, and users have 25 days before they get a
dialog telling them they're not activated."

The TechNet support document (http://technet.microsoft.com/en-us/library/ee624357%28office.14%29.aspx#section4) that explains rearming Office


2010 says much the same thing, though in much denser prose.

According to a recent entry on the "My Digital Life"(http://www.mydigitallife.info/2010/04/28/how-to-rearm-office-2010-for-free-6-months-


extended-usage/) blog, the rearm command works on the RTM, or "release to manufacturing" build that Microsoft used to produce the final copies of
the suite.

Although Microsoft has yet to launch Office 2010 at retail or offer it to consumers, it has posted a free 60-day trial
(http://www.computerworld.com/s/article/9176804/%20http://technet.microsoft.com/en-us/evalcenter/ee390818.aspx) of Office Professional Plus
2010 on its TechNet site. The company has also hinted that it will post trial versions of one or more retail editions this summer after Office 2010 goes
on sale.

Trial versions, including the one now available, come with limited-time activation codes. The trial of Office 2010 Professional Plus requires an
activation code immediately, and cannot be installed without one. By entering the free activation code provided prior to downloading, and then
declining to automatically activate Office, users will end up with a copy that is not activated.

Presumably, the trial copy's lifespan can then be extended using the rearm technique. Computerworld was not able to verify that, however. It's
unknown whether future trial editions of Office 2010 will also demand an activation code before installation.

Microsoft (http://www.computerworld.com/s/article/9137060/Microsoft_Update_Latest_news_features_reviews_opinions_and_more) seems resigned


to the fact that rearm can be used by people other than IT administrators. "We allow five rearms for volume products," the company's spokeswoman
said. "Of course that can be abused to let people use Office for longer periods of time without being nagged, but that's an acceptable trade-off."

Previous rearm techniques have regularly been reported by technology sites and bloggers. Last August, for example, the Windows Secrets newsletter
published step-by-step instructions on using a single-line rearm command to add an additional 90 days
(http://www.computerworld.com/s/article/9176804/%20http://www.computerworld.com/s/article/9136859/Windows_7_will_run_120_days_for_free_
Microsoft_confirms) to Windows 7's
(http://www.computerworld.com/s/article/9119998/Continuing_Coverage_Microsoft_Windows_7_Vista_Reloaded) stock 30-day grace period.

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Two years before, a similar technique surfaced for extending Windows Vista's
(http://www.computerworld.com/s/article/9176804/%20http://www.computerworld.com/s/article/9011482/How_to_run_a_legal_copy_of_Vista_for_
120_days_without_activation) grace period to 120 days.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on
Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.
<hr
>

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Attachment 5
Deploying Volume Activation for Office 2010
http://blogs.technet.com/b/deploymentguys/archive/2011/06/15/deploying-volume-activation-for-office-2010.aspx
DeploymentGuys, 15 Jun 2011 11:46 AM

In this post I will be showing you how to use ospprearm.exe as part of a MDT Task Sequence to rearm Office 2010
Volume Activation in Windows 7 and Office 2010 uses Key Management Service (KMS) or Multiple Activation Keys (MAK). In an enterprise
environment, it is highly recommended to use the same KMS infrastructure for the activation of Windows Server 2008, Windows 7, Windows Server
2008 R2, and Office 2010. A KMS for Windows can be set up following the Volume Activation Deployment Guide (http://technet.microsoft.com/en-
us/library/dd772269.aspx), and the same KMS can be enabled for Office 2010 activation with the Microsoft Office 2010 KMS Host License Pack
(http://www.microsoft.com/downloads/en/details.aspx?FamilyID=97b7b710-6831-4ce5-9ff5-fdc21fe8d965&displaylang=en).
Normally, KMS activation of Office 2010 happens without issues. But if you installed Office 2010 as part of a master image, and deployed that image
25 days later, you could get notification dialog boxes immediately following the deployment of that image. As shown below, the text of the
notification would be:

This copy of Microsoft Office is not activated

This copy of Microsoft Office is designed for corporate or institutional customers. Connect your computer to your corporate network to complete
activation. Your system administrator can help.

http://blogs.technet.com/cfs-file.ashx/__key/communityserver-blogs-components-weblogfiles/00-00-00-61-27-
metablogapi/4278.clip_5F00_image002_5F00_63CB5620.png

As described in Deploy volume activation of Office 2010 (http://technet.microsoft.com/en-us/library/ee624357.aspx#section4), the notification is


caused by the expiration of the 25-day grace period, from the day when Office 2010 is installed in the master image (and then captured), to the day
when the master image is deployed. If the difference between these two points in time is more than 25 days, notifications to activate are displayed to
the user.

You might be wondering - you sysprepped the machine during the image capture, so why is this happening? The problem is that sysprep does not
have the capability to automatically rearm Office 2010 (http://technet.microsoft.com/en-us/library/ff678211.aspx). The solution, therefore, is that all
Office 2010 installations should be rearmed before capturing the master image. Details to automate this process, as part of the Task Sequence, are
provided below.

By design, the 25-day grace period should give ample time for a KMS host to be found and activation to succeed. If activation is successful, users do
not see notifications to activate. All Office 2010 volume products have the KMS client keys preinstalled (http://technet.microsoft.com/en-
us/library/ee624355.aspx), and using a KMS key vs. a MAK key can be selected using the Office Customization Tool.

Note: Besides the activation notification caused by not rearming Office 2010, there stands a chance that Office activation might never happen, due to
the same Office 2010 CMID for all computers, as described for Windows 7 activation in KMS Host Client Count not Increasing Due to Duplicate
CMID'S (http://blogs.technet.com/b/askcore/archive/2009/10/16/kms-host-client-count-not-increasing-due-to-duplicate-cmid-s.aspx). While this
article refers to activation not happening for Windows 7 because of duplicated CMIDs, as what can happen if VMs were cloned without using sysprep
/generalize, what isn't necessarily clear is that there is a separate CMID for Office 2010, independent of the Windows CMID. This means that if you
don't rearm Office 2010 (analogous to not running sysprep /generalize on Windows 7, thereby not "rearming" Windows 7), and capture that
installation as a master image, all deployments of that image will have the same Office 2010 CMID. Then, Office 2010 will never activate beyond the
first machine where that image is deployed.

Bad, huh? So, remember, rearm Office 2010, and system /generalize Windows 7 (the latter is automatically done with MDT or MDT-integrated
ConfigMgr Task Sequences).

Rearming the Office 2010 Installation during the Build Task Sequence

Office 2010 can be rearmed with the following batch file as a task in the Build Task Sequence, executed immediately after the installation of Office
2010:

rearmOffice2010.cmd

@echo off

IF /i "%PROCESSOR_ARCHITECTURE%" == "AMD64" "%PROGRAMFILES(x86)%\Common Files\microsoft


shared\OfficeSoftwareProtectionPlatform\OSPPREARM.EXE"

IF /i "%PROCESSOR_ARCHITECTURE%" == "X86" "%PROGRAMFILES%\Common Files\microsoft


shared\OfficeSoftwareProtectionPlatform\OSPPREARM.EXE"

Alternatively, the commands above can also run as a VBScript:

runOffice2010rearm.vbs

'==========================================================================

' NAME: runOffice2010rearm.vbs

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SANDO SASAKO

' AUTHOR: Charlie Chen (MCS), Microsoft Corp.

' DATE : 1/24/2011

' COMMENT: To be executed after the installation of Office 2010 install,

' but before capturing the master image.

' Rearming Office 2010 is important:

' http://technet.microsoft.com/en-us/library/ee624357.aspx#section4

' As sysprep does not automatically rearm Office 2010:

' http://technet.microsoft.com/en-us/library/ff678211.aspx

'==========================================================================

strComputer = "."

Set objWMIService = GetObject("winmgmts:" _

& "{impersonationLevel=impersonate,authenticationLevel=Pkt}!\\" _

& strComputer & "\root\cimv2")

Set colSettings = objWMIService.ExecQuery ("SELECT Architecture FROM Win32_Processor")

Set oShell = WScript.CreateObject ("WScript.Shell")

CommonProgramFilesx86 = oShell.ExpandEnvironmentStrings("%CommonProgramFiles(x86)%")

CommonProgramFiles = oShell.ExpandEnvironmentStrings("%CommonProgramFiles%")

For Each objProcessor In colSettings

If objProcessor.Architecture = 9 Then

'64-bit OS

oShell.run Chr(34) & CommonProgramFilesx86 & "\microsoft shared\OfficeSoftwareProtectionPlatform\OSPPREARM.EXE" & Chr(34),1,True

ElseIf objProcessor.Architecture = 0 Then

'32-bit OS

oShell.run Chr(34) & CommonProgramFiles & "\microsoft shared\OfficeSoftwareProtectionPlatform\OSPPREARM.EXE" & Chr(34),1,True

End If

Next

Set colSettings = Nothing

Set oShell = Nothing

Rearming the Office 2010 Installation during the Deploy Task Sequence

If a master image contains Office 2010 and the rearm was not performed, the rearm can also be executed in the Deploy Task Sequence. This can be
performed by using the script in the following blog:

http://blogs.technet.com/b/odsupport/archive/2010/06/14/troubleshooting.aspx

However, the preferred method is to rearm Office 2010 in the Build Task Sequence, so that the rearm gets captured as part of a master image.

This post was contributed by Charlie Chen, a Consultant with Microsoft Services US with contributions from Barry Hartmann a Senior Consultant
with Microsoft Services US

Disclaimer: The information on this site is provided "AS IS" with no warranties, confers no rights, and is not supported by the authors or Microsoft
Corporation. Use of included script samples are subject to the terms specified in the Terms of Use (http://www.microsoft.com/info/cpyright.mspx)
<hr>

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Attachment 6
The Microsoft Tool Kits
Three versions of MSTK compared

Office 2010 Toolkit Switches of Office Toolkits (2.1.2)


1. A batch file/script on the disk would be a universal solution.
2. Install/Uninstall AutoKMS: "Office 2010 Toolkit.exe" /AutoKMS
3. Install/Uninstall AutoRearm: "Office 2010 Toolkit.exe" /AutoRearm
4. Run EZ-Activator: "Office 2010 Toolkit.exe" /EZ-Activator
5. Log: "Office 2010 Toolkit.exe" /OneOfTheSwitchesAbove /Log

Main Tab of Office Toolkits (2.1.2)


1. KMS Server To Use: Allows you to set what KMS server should be used when attempting KMS activation. Unless you have a real KMS
server or a network host running the KMS emulator you will want this set to 127.0.0.1.
2. Use KMS Keygen/Emulator: Uses KMS emulator to perform KMS activation. Unless you have a real KMS server or a network host
running the KMS emulator you will want this enabled.
3. Delete KMS Keygen After Run: Removes the KMS emulator from your PC after KMS activation.
4. Delete KMS Host After Run: Removes the KMS server from the registry after KMS activation.
5. Auto-Repair Office After License Delete: After running License Delete All, automatically repair Office afterwards so you don't have to
open Office and go through all the error dialogs and repair progress windows. Chances of successful activation right after this are
higher than manually repairing Office.
6. Verbose Check Activation Status: Shows ALL possible product keys you can install, not just the ones you have installed. Showing this
helps in troubleshooting.

Rearm
Rearm resets the 30 day grace period that all Office 2010 products have. Rearm can be done up to 5 times. The available button will tell you how
many rearms you have available.
It's widely known that Microsoft allows anyone to install and use any version of Windows 7 for 30 days without having to enter a product activation
key. By using the slmgr -rearm command, this 30-day trial period can be extended three times for a total of 120 days before the installation must be
activated to continue functioning.
It is less known, perhaps, that Microsoft has implemented a similar method for delaying the activation of Office 2010 for up to 180 days. The steps
below are from the Deploy volume activation of Office 2010 (http://technet.microsoft.com/en-us/library/ee624357.aspx#section4) instructions on
TechNet (http://technet.microsoft.com/).
To rearm your Office 2010 installation
1. Make sure all Office 2010 applications are closed.
2. Open an elevated command prompt.
3. Go to %installdir%\%Program Files%\Common Files\Microsoft Shared\OfficeSoftwareProtectionPlatform. If you installed the 32-bit
edition of Office 2010 on a 64-bit operating system, %Program Files% is the Program Files (x86) folder.
4. Run ospprearm.exe.

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SANDO SASAKO

The Office 2010 rearm delays the activation requirement for 30 days, and it can be used five times, for a total of 180 days of activation-free use.
https://ardamis.com/2011/05/31/office-2010-rearm/

AutoRearm
AutoRearm is a scheduled task that will allow you to use Office 2010 in grace period forever (It is a trial reset, not an activator). It requires that you
have at least 1 available rearm upon install. It works by taking a backup of your activation and restoring it when you run out of rearms. It runs on
startup and then every 24 hours, and checks how many days left you have on your grace period (the task schedule cannot be changed). It will rearm if
you have 5 or fewer days before your grace period expires.
If the rearm fails because the count ran out (which is normal and inevitable), it restores the backup, which puts the count where it was upon install of
AutoRearm. Because this grace period is likely expired, it then rearms (which is why at least 1 rearm is required). The backup will be restored upon
uninstall reverting your PC to whatever state it would be in when you installed AutoRearm (though grace may be expired).
Invalid statement: AutoRearm cannot be installed alongside AutoKMS or timesurfer's IORRT (which does the same thing as AutoRearm). The
mstk2.0.1 activat.jpg picture shows you otherwise.

AutoRearm Tab of Office Toolkits (2.1.2)


Convert Retail To VL: Runs the converter from EZ-Activator so that you don't get the Retail nags every start of Office.
EZ-Activator Tab:
1. Number Of Activation Attempts Per Product: How many times activation should be tried before giving up for that product. 10 to 25
attempts are recommended.
2. Install AutoKMS: If EZ-Activator succeeds it will install AutoKMS.
3. Convert Unactivated Retail To KMS: If using Retail License and it is not permanently activated, convert it to VL and install KMS Product
Key.
4. Convert Unactivated MAK To KMS: If using VL MAK License and it is not permanently activated, install KMS Product Key.
5. Permanently Activate Starter: If you are using Office 2010 Starter with subscription License, install Product Key that results in instant and
permanent activation for Starter. I have never seen a subscription Starter Office 2010 as it's supposed to be a free advertising
supported product so you can probably disable this to make EZ-Activator skip this and save a few seconds of time.
6. Uninstall Unactivated Keys: If EZ-Activator converts an Unactivated Retail License to VL, uninstall the Retail key so Office 2010 does
not use both Retail and VL Product Key.
7. Rearm On Failure: If EZ-Activator fails, attempt to rearm. If rearm succeeds, try activating again.
8. Reinstall Licenses On Failure: Run the License Add for all Office 2010 licenses currently installed then try activating again.
9. Delete Licenses On Failure: Run License Delete All, then automatically repair Office 2010 licensing (not affected by the Auto-Repair on
License Delete setting, so this will always repair automatically). After repairing, attempt activation again. This is what usually fixes
persistent activation errors so I strongly encourage leaving this enabled.
10. Take Backup In Case Of Failure: Create a temporary backup, and restore it if EZ-Activator totally fails to activate. This effectively
reverses all changes EZ-Activator made.

What is KMS?
Key Management Service (KMS) is
1. to enable activation of of [Microsoft (Office) and] Windows [products] within the enterprise (Volume License) customers.
2. a renewal app program (a Windows Win32 service) for Microsoft products (Office and Windows).
3. attempting to reactivate (Microsoft products) on a regular interval

There are 2 types of KMS, that is KMS Host and KMS Client.
1. The KMS host is the system where you will need to install a key (the KMS key from the Volume License Service Center (VLSC)) and
then activate the service. The service is supported on Windows Server 2003, Windows Vista, Windows 7, Windows Server 2008, or
Windows Server 2008 R2.
2. KMS clients is a Windows operating system that uses Volume Activation, that is Windows 7, Windows Vista, Windows Server 2008 R2,
and Windows Server 2008. The KMS clients come with a key pre-installed, called the Generic Volume License Key (GVLK) or KMS
Client Setup Key. The presence of the GVLK is what makes a system a KMS client. The KMS clients find the KMS host via a DNS
SRV record (_vlmcs._tcp) and then automatically attempt to discover and use this service to activate themselves. When in the 30 day
Out of Box grace period, they will try to activate every 2 hours. Once activated, the KMS clients will attempt a renewal every 7 days.

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

mstk2.0.1 activat.jpg

AutoKMS
AutoKMS is a scheduled task that will renew your 180 day KMS activation. Unlike other KMS activators, AutoKMS does not run 24/7 or only at the
last minute with the hope it won't fail, and leaves no traces of itself other than a scheduled task and exe file. It only attempts to activate KMS licenses
(which saves a lot of time if you have non-KMS licenses such as MAK or Retail active).
It will run at startup and then every 24 hours and attempt KMS activation a set amount of times (the task schedule cannot be changed). The
Install/Uninstall buttons are used to install or remove AutoKMS.
Invalid statement: AutoKMS cannot be installed alongside AutoRearm or timesurfer's IORRT. Check on the mstk2.0.1 activat.jpg picture.

AutoKMS Tab of Office Toolkits (2.1.2)


1. Number Of Activation Attempts Per Product: How many times activation should be tried before giving up for that product. 10 to 25
attempts are recommended.
2. KMS Server To Use: Allows you to set what KMS server should be used when attempting KMS activation. Unless you have a real KMS
server or a network host running the KMS emulator you will want this set to 127.0.0.1.
3. Logging: Saves the results of AutoKMS to a log file so you can see if activation was successful, if it failed, and why.
4. Use KMS Keygen/Emulator: Uses KMS emulator to perform KMS activation. Unless you have a real KMS server or a network host
running the KMS emulator you will want this enabled.
5. Delete KMS Keygen After Run: Removes the KMS emulator from your PC after KMS activation.
6. Delete KMS Host After Run: Removes the KMS server from the registry after KMS activation.
7. Activate Windows: Attempt to activate Windows. Only use if you have KMS key installed on KMS supported version of Windows.

Paths Tab of Office Toolkits (2.1.2)


1. AutoRearm: Choose where AutoRearm will be installed.
2. AutoKMS: Choose where AutoKMS will be installed.
3. KMSEmulator: Choose where KMSEmulator will be installed/used.

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SANDO SASAKO

Attachment 7
How KMSAutoEasy v1.06v6 by Ratiborus feeds the KMS Server Emulator Service

1. Ratiborus uses KMS Service from mikmik38 (MDL).


2. Acknowledge the KMSServer.exe (KMSServerService.exe) by your antivirus (and firewall) program.

3. Keep the Current Count not to be zero.

Current Count
The count displayed will be between 0 and 50. The count is cumulative (between operating systems) and contains the number of valid systems
that have attempted to activate within a 30 day period.
If the count is 0, it is a newly activated service or no valid clients have connected to the KMS host.
The count will not increase above 50, no matter how many valid systems exist in the environment. This is because they count is set to cache only
2 times the maximum license policy returned by a KMS client. The maximum policy today is set by the Windows client OS, which requires a
count of 25 or higher from the KMS host to activate itself.
Therefore, the highest count on the KMS host is 2 x 25, or 50. Note that in environments with only Windows Server KMS clients, the maximum
count on the KMS host will be 10, as the threshold for server is 5 (2 x 5, or 10).
A common issue related to count is where the environment has an activated KMS host and a sufficient number of clients, but the count does not
increase beyond 1. The core problem is that the deployed client image was not configured correctly (sysprep /generalize) and the systems do not
have unique Clint Machine IDs (CMIDs).

30
WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

See the KMS Client section (below) and KB929829 (http://support.microsoft.com/kb/929829) for more info. This has also been blogged
(http://blogs.technet.com/askcore/archive/2009/10/16/kms-host-client-count-not-increasing-due-to-duplicate-cmid-s.aspx) by one of our Support
Escalation Engineers.
Another reason why the count may not be increasing is that there are too many KMS hosts in the environment and the count is distributed over all
of them.

4. Installing TAP-Windows Adapter V9 (9.9.2) driver (tap0901.sys)


The virtual network adapter is to keep the communications between KMS clients and the KMS host remain open. Communication with KMS is
via anonymous RPC. 1688 is the default TCP port used by the clients to connect to the KMS host. The port can be changed and can be configured
on the KMS host. The KMS clients receive this port designation from the KMS host during their communication. If you change the port on a
KMS client, it will be overwritten when that client contacts the host.

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WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

5. Running TunMirror.exe only on KMS clients.

6. Running a script through Microsoft Windows Script Host Version 5.7 to activate Microsoft (Windows and Office [2010]) products.

<hr>

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SANDO SASAKO

Attachment 8
Dealing and Cracking Microsoft Office 2007
1. Install trial, without inserting any serial number.
2. Once installed, find proof.xml. It is located in C:\Program Files\Common Files\Microsoft Shared\OFFICE12\Office Setup
Controller\Proof.en.
3. Once proof.xml file is found, located, select the file, right click on the file, choose edit.
4. Find these strings
</Feature> <Feature Id="SetupXmlFiles" Cost="1248">
<OptionRef Id="AlwaysInstalled"/>
</Feature>
5. Change the word AlwaysInstalled with NeverInstalled.
6. Save and close the XML file.
7. You can run Microsoft Office 2007 with full version, without serial number and activation.
http://bismillahslamet.blogspot.com/2011/02/microsoft-office-professional-2010-plus.html
<hr>

34
WHAT DO WE LEARN FROM KMS TECHNOLOGY? AN AI.

Attachment 9
Intelligence Defined

Encyclopdia Britannica, Britannica Concise Encyclopdia, Revised and Expanded Edition, Peru, 2006.

1. In human terms, intelligence is derived through biological factors (such as genes and characteristics) and/or forged by environmental
factors (such as socioeconomic conditions).
2. In education, the ability to learn or understand or to deal with new or challenging situations.
3. In psychology, the term may more specifically denote the ability to apply knowledge to manipulate one's environment or to think
abstractly as measured by objective criteria (such as the IQ test).
4. In government and military operations, evaluated information concerning the strength, activities, and probable courses of action of
international actors that are usually, though not always, enemies or opponents. Known as covert action, it can refer to the collection,
analysis, and distribution of such information and to the secret intervention in the political or economic affairs of other countries.
5. That is to say, intelligence is:
6. an important component of national power
7. a fundamental element in decision making regarding national security, defense, and foreign policies.
8. conducted on three levels: strategic, tactical, and counterintelligence.

William John Teahan, Artificial Intelligence Agent Behaviour I, Ventus Publishing ApS, 2010.

1. Intelligence without Reason can be read as a statement that intelligence is an emergent property of certain complex systems - it sometimes
arises without an easily identifiable reason for arising. Rodney A Brooks. 1987. Intelligence without reason.
2. Lao Tzu, 6th century BC, Chinese recordkeeper (in the Zhou Dynasty court), "Knowing others is intelligence; knowing yourself is true
wisdom. Mastering others is strength; mastering yourself is true power. If you realize that you have enough, you are truly rich."
3. Socrates, 469-399 BC, Greek philosopher, "I know that I am intelligent, because I know that I know nothing."
4. Leonado da Vinci, 1452-1519 Italian scientist, sculptor, various, others, "Anyone who conducts an argument by appealing to authority is
not using his intelligence, he is just using his memory."
5. Abigail Adams. 1744-1818 American First Lady, "I've always felt that a person's intelligence is directly reflected by the number of
conflicting points of view he can entertain simultaneously on the same topic."
6. Albert Einstein, 1879-1955, German physicist, "The true sign of intelligence is not knowledge but imagination."
7. Bertolt Brecht, 1898-1956, German Poet and Playwright, "Intelligence is not to make no mistakes, but quickly to see how to make them
good."
8. Arthur Samuel, 1901-1990, American AI pioneer, "[T]he aim [is] to get machines to exhibit behavior, which if done by humans, would be
assumed to involve the use of intelligence."
9. Alan Turing, 1912-1954, British computer scientist, mathematician, "A computer would deserve to be called intelligent if it could deceive
a human into believing that it was human."
10. Susan Sontag, 1933-2004, American Writer, "Intelligence is really a kind of taste: taste in ideas."
11. Carl Sagan, 1934-1996, American Astronomer, Writer, Scientist, "Knowing a great deal is not the same as being smart; intelligence is not
information alone but also judgment, the manner in which information is collected and used."
12. Linus Torvalds, 1969-, Finnish software engineer, "Intelligence is the ability to avoid doing work, yet getting the work done."

AI researchers with a background in knowledge engineering and the symbolic approach to AI will describe intelligence using ingredients such as the
following:
1. the capacity to acquire and apply knowledge;
2. the ability to perform reasoning; and
3. the ability to make decisions and plan in order to achieve a specific goal.

AI researchers who prefer a behavioural-based approach will describe the intelligent behaviour of embodied, situated agents using ingredients
such as:
1. the ability to perform an action that an external intelligent agent would deem to be intelligent;
2. the ability to demonstrate knowledge of the consequences of its actions; and
3. the ability to demonstrate knowledge of how to influence or change its environment in order to affect outcomes and achieve its goals.

If we think of intelligence using an analogy of mapping, as discussed in the previous chapter, then we might use the following ingredients to describe
intelligence:
1. the ability of an embodied, situated agent to map environments, both real and abstract (i.e. recognize patterns to provide useful
simplifications and/or characterizations of its environments);
2. the ability to use maps to navigate around its environments;
3. the ability to update its maps when it finds they do not fit reality; and
4. the ability to communicate details of its maps to other agents.
<hr>

35
SANDO SASAKO

Attachment 10
The PageRank Algorithm
Stuart J. Russell and Peter Norvig, Artifiial Intelligence: A Modern Approach, 3/e, Prentice Hall, New Jersey, 2010, p.871.

PageRank3 was one of the two original ideas that set Google's search apart from other Web search engines when it was introduced in 1997. (The other
innovation was the use of anchor text-the underlined text in a hyperlink-to index a page, even though the anchor text was on a different page than the
one being indexed.)
3 The name stands both for Web pages and for coinventor Larry Page (Brin and Page, 1998).

PageRank was invented to solve the problem of the tyranny of TF scores: if the query is [IBM], how do we make sure that IBM's home page,
ibm.com, is the first result, even if another page mentions the term "IBM" more frequently? The idea is that ibm.com has many in-links (links to the
page), so it should be ranked higher: each in-link is a vote for the quality of the linked-to page. But if we only counted in-links, then it would be
possible for a Web spammer to create a network of pages and have them all point to a page of his choosing, increasing the score of that page.
Therefore, the PageRank algorithm is designed to weight links from high-quality sites more heavily. What is a high-quality site? One that is linked to
by other high-quality sites. The definition is recursive, but we will see that the recursion bottoms out properly. The PageRank for a page p is defined
as:

PR(p) = ((1 - d) / N) + (d . Sigma_i (PR(in_i) / C (in_i))

where PR(p) is the PageRank of page p, N is the total number of pages in the corpus, in_i are the pages that link in to p,and C(in_i) is the count of the
total number of out-links on page in_i. The constant d is a damping factor. It can be understood through the random surfer model: imagine a Web
surfer who starts at some random page and begins exploring.

With probability d (we'll assume d=0.85) the surfer clicks on one of the links on the page (choosing uniformly among them), and with probability 1 -
d she gets bored with the page and restarts on a random page anywhere on the Web. The PageRank of page p is then the probability that the random
surfer will be at page p at any point in time. PageRank can be computed by an iterative procedure: start with all pages having PR(p)=1, and iterate the
algorithm, updating ranks until they converge.
<hr>

36
Attachment 11
Artificial Intelligence: The Promise and The Peril
The Economist May 9th 2015
Volume 415 Number 8937

Artificial intelligence: The promise and the peril


11 On the cover Powerful computers will reshape humanitys future How to ensure the promise outweighs the perils
11 Leaders Clever computers. The dawn of artificial intelligence
You taught me language and...
...I know how to curse
18-21 On the cover Artificial Intelligence scares peopleexcessively so
18 Briefing Artificial Intelligence. Rise of the machines.
Artificial intelligence scares peopleexcessively so
Deep thought
Caught by the net
No ghost in the machine
A snare and an illusion

Indonesia: Time to open up


12 Leaders Making Indonesia grow. Jokowis to-do list.
Indonesias president should ditch his economic nationalismand, if necessary, his party
Promises, promises
12 Sidelines1 Jokowi Indonesias president should ditch his economic nationalismand if necessary his party.
65 Sidelines1 Bad policy as much as bad infrastructure is holding Indonesia back
65 Finance and economics Indonesias economy. Spicing up growth

Inside the anti-bribery business.


14 Leaders Bribery. Daft on graft
14 Sidelines2b Governments are right to take a hard line on commercial bribery. But the system is becoming
ridiculous.
More justice, please
62 Sidelines2b How the enforcement of laws against corporate bribery is increasing and may go too far.
62 Business Corporate bribery. The anti-bribery business
62 Business Are bribery investigations too harsh?

The rise of fintech.


13 Leaders Financial services. The fintech revolution
13 Sidelines2 A wave of startups is changing finance for the better.
44+ Sidelines2 Financial technology will make banks less profitable. But it is unlikely to kill them off.
44+ Special report International banking. Slings and arrows.

12 Leaders How to prevent riots. Fixing Americas inner cities

56 Business Internet firms. Eat or be eaten


64 Business Schumpeter. The self-service economy

page 11 The dawn of artificial intelligence

Powerful computers will reshape humanitys future. How to


ensure the promise outweighs the perils Todays deep learning systems, by mimicking the layers of neurons in
a human brain and crunching vast amounts ofdata, can teach themselves
THE development of full artificial intelligence could spell the end of to perform some tasks, from pattern recognition to translation, almost as
the human race, Stephen Hawking warns. Elon Musk fears that the well as humans can.
development of artificial intelligence, orAI, maybe the biggest
existential threat humanity faces. Bill Gates urges people to beware of it. As a result, things that once called for a mindfrom interpreting
pictures to playing the video game Froggerare now within the scope
Dread that the abominations people create will become their masters, or of computer programs. DeepFace, an algorithm unveiled by Facebook in
their executioners, is hardly new. But voiced by a renowned 2014, can recognise individual human faces in images 97% of the time.
cosmologist, a Silicon Valley entrepreneur and the founder of Microsoft
hardly Ludditesand set against the vast investment in AI by big Crucially, this capacity is narrow and specific. Todays AI produces the
firms like Google and Microsoft, such fears have taken on new weight. semblance of intelligence through brute number-crunching force,
without any great interest in approximating how minds equip humans
With supercomputers in every pocket and robots looking down on every with autonomy, interests and desires. Computers do not yet have
battlefield, just dismissing them as science fiction seems like self- anything approaching the wide, fluid ability to infer, judge and decide
deception. The question is how to worry wisely. that is associated with intelligence in the conventional human sense.

You taught me language and... Yet AI is already powerful enough to make a dramatic difference to
human life. It can already enhance human endeavour by complementing
The first step is to understand what computers can now do and what they what people can do. Think of chess, which computers now play better
are likely to be able to do in the future. Thanks to the rise in processing than any person. The best players in the world are not machines
power and the growing abundance of digitally available data, AI is however, but what Garry Kasparov, a grandmaster, calls centaurs:
enjoying a boom in its capabilities (see pages 18-21). amalgamated teams of humans and algorithms.
Such collectives will become the norm in all sorts of pursuits: supported And the business case for even limited intelligence of the general sort
by AI, doctors will have a vastly augmented ability to spot cancers in the sort that has interests and autonomyis far from clear. A car that
medical images; speech-recognition algorithms running on smartphones drives itself better than its owner sounds like a boon; a car with its own
will bring the internet to many millions of illiterate people in developing ideas about where to go, less so.
countries; digital assistants will suggest promising hypotheses for
academic research; image-classification algorithms will allow wearable ...I know how to curse
computers to layer useful information onto peoples views of the real
world. But even if the prospect of what Mr Hawking calls full AI is still
distant, it is prudent for societies to plan for how to cope. That is easier
Even in the short run, not all the consequences will be positive. than it seems, not least because humans have been creating autonomous
Consider, for instance, the power that AI brings to the apparatus of state entities with superhuman capacities and unaligned interests for some
security, in both autocracies and democracies. The capacity to monitor time.
billions of conversations and to pick out every citizen from the crowd by
his voice or her face poses grave threats to liberty. Government bureaucracies, markets and armies: all can do things which
unaided, unorganised humans cannot. All need autonomy to function, all
And even when there are broad gains for society, many individuals will can take on life of their own and all can do great harm if not set up in a
lose out from AI. The original computers were drudges, often women, justmanner and governed by laws and regulations.
who performed endless calculations for their higher-ups. Just as
transistors took their place, so AI will probably turf out whole regiments These parallels should comfort the fearful; they also suggest concrete
of white-collar workers. Education and training will help and the wealth ways for societies to develop AI safely. Just as armies need civilian
produced with the aid of AI will be spent on new pursuits that generate oversight, markets are regulated and bureaucracies must be transparent
new jobs. But workers are doomed to dislocations. and accountable, so AI systems must be open to scrutiny.

Surveillance and dislocations are not, though, what worries Messrs Because systems designers cannot foresee every set of circumstances,
Hawking, Musk and Gates, or what inspires a phalanx of futuristic AI there must also be an off-switch. These constraints can be put in place
films that Hollywood has recently unleashed onto cinema screens. Their without compromising progress. From the nuclear bomb to traffic rules,
concern is altogether more distant and more apocalyptic: the threat of mankind has used technical ingenuity and legal strictures to constrain
autonomous machines with superhuman cognitive capacity and interests other powerful innovations.
that conflict with those of Homo sapiens.
The spectre of eventually creating an autonomous non-human
Such artificially intelligent beings are still a very long way off; indeed, it intelligence is so extraordinary that it risks overshadowing the debate.
may never be possible to create them. Despite a century of poking and Yes, there are perils. But they should not obscure the huge benefits from
prodding at the brain, psychologists, neurologists, sociologists and the dawn of AI.
philosophers are still a long way from an understanding of how a mind
might be madeor what one is.

page 18 Rise of the machines

Artificial intelligence scares peopleexcessively so power now available for processing that torrent, means that their
algorithms are more and more capable of understanding languages,
ELON MUSK busies himself building other peoples futures. A serial recognising images and the like.
entrepreneur who made his first fortune in the early days of the world
wide web, he has since helped found a solar-power company to generate Business is taking notice. So are those who worry about technology
green electricity, an electric-car firm to liberate motorists from the taking away peoples jobs. Lots of work depends on recognising patterns
internal combustion engine, and a rocketry businessSpaceXto and translating symbols. If computers replace some of the people now
pursue his desire to see a human colony on Mars within his lifetime. It doing this, either by providing an automated alternative or by making a
makes him the sort of technologist you would expect might look on few such workers far more productive, there will be more white collars
tomorrow with unbridled optimism. in the dole queue.

Not all future technology meets with his approval, though. In a speech in Signs of the AI boom are everywhere. Last year, Google was rumoured
October at the Massachusetts Institute of Technology, Mr Musk to have paid $400m for DeepMind, a London-based AI startup. It
described artificial intelligence (AI) as summoning the demon, and the snatched the firm from under the nose of Facebook, which boasts its
creation of a rival to human intelligence as probably the biggest threat own dedicated AI research laboratory, headed by Yann LeCun, a star
facing the world. He is not alone. researcher hired from New York University.

Nick Bostrom, a philosopher at the University of Oxford who helped Google once employed Andrew Ng, an AI guru from Stanford
develop the notion of existential risksthose that threaten humanity Universityuntil Baidu poached him last year to head up a new, Silicon
in generalcounts advanced artificial intelligence as one such, Valley-based lab of its own. Firms such as Narrative Science, in
alongside giant asteroid strikes and all-out nuclear war. Lord Rees, who Chicago, which hopes to automate the writing of reports (and which is
used to run the Royal Society, Britains foremost scientific body, has already used by Forbes, a business magazine, to cover basic financial
since founded the Centre for the Study of Existential Risk, in stories), and Kensho, of Cambridge, Massachusetts, which aims to
Cambridge, which takes the risks posed by AI just as seriously. automate some of the work done by quants in the financial industry,
have been showered in cash by investors.
Such worries are a mirror image of the optimism suffusing the field
itself, which has enjoyed rapid progress over the past couple of years. On April 13th IBM announced plans to use a version of its Watson
Firms such as Google, Facebook, Amazon and Baidu have got into an computerwhich crushed two puny human champions at an
AI arms race, poaching researchers, setting up laboratories and buying obscurantist American quiz show called Jeopardy! In 2011to analyse
startups. health records, looking for medical insights.

The insiders are not, by and large, fretting about being surpassed by their Deep thought
creations. Their business is not so much making new sorts of minds as it
is removing some of the need for the old sort, by taking tasks that used Research into artificial intelligence is as old as computers themselves.
to be things which only people could do and making them amenable to Much of the current excitement concerns a subfield of it called deep
machines. learning, a modern refinement of machine learning, in which
computers teach themselves tasks by crunching large sets of data.
The torrent of data thrown off by the worlds internet-connected Algorithms created in this manner are a way of bridging a gap that
computers, tablets and smartphones, and the huge amounts of computing
bedevils all AI research: by and large, tasks that are hard for humans are contain faces and some will not. Each will be labelled as such by a
easy for computers, and vice versa. human. The images act as inputs to the system; the labels (face or not
face) as outputs. The computers task is to come up with a statistical
The simplest computer can run rings around the brightest person when it rule that correlates inputs with the correct outputs.
comes to wading through complicated mathematical equations. At the
same time, the most powerful computers have, in the past, struggled To do that, it will hunt at every level of abstraction for whatever features
with things that people find trivial, such as recognising faces, decoding are common to those images showing faces. Once these correlations are
speech and identifying objects in images. good enough, the machine will be able, reliably, to tell faces from not-
faces in its training set. The next step is to let it loose on a fresh set of
One way of understanding this is that for humans to do things they find images, to see if the facial-recognition rules it has extracted hold up in
difficult, such as solving differential equations, they have to write a set the real world.
of formal rules. Turning those rules into a program is then pretty simple.
For stuff human beings find easy, though, there is no similar need for By working from the bottom up in this way, machine-learning
explicit rulesand trying to create them can be hard. To take one algorithms learn to recognise features, concepts and categories that
famous example, adults can distinguish pornography from non- humans understand but struggle to define in code. But such algorithms
pornography. were, for a long time, narrowly specialised. Programs often needed hints
from their designers, in the form of hand-crafted bits of code thatwere
But describing how they do so is almost impossible, as Potter Stewart, specific to the taskat handone set of tweaks for processing images,
an American Supreme Court judge, discovered in 1964. Frustrated by say, and another for voice recognition.
the difficulty of coming up with a legally watertight definition, he
threwup his hands and wrote that, although he could not define porn in Earlier neural networks, moreover, had only a limited appetite for data.
the abstract, I know it when I see it. Beyond a certain point, feeding them more information did not boost
their performance. Modern systems need far less hand-holding and
Machine learning is a way of getting computers to know things when tweaking. They can also make good use of as many data as you are able
they see them by producing for themselves the rules their programmers throw at them. And because of the internet, there are plenty of data to
cannot specify. The machines do this with heavy-duty statistical analysis throw.
of lots and lots of data.
Big internet companies like Baidu, Google and Facebook sit on huge
Many systems use an old and venerable piece of AI technology, the quantities of information generated by their users. Reams of e-mails;
neural network, to develop the statistics that they need. Neural networks vast piles of search and buying histories; endless images of faces, cars,
were invented in the 1950s by researchers who had the idea that, though cats and almost everything else in the world pile up in their servers.
they did not know what intelligence was, they did know that brains had
it. The people who run those firms know that these data contain useful
patterns, but the sheer quantity of information is daunting. It is not
And brains do their information processing not with transistors, but with daunting for machines, though. The problem of information overload
neurons. If you could simulate those neuronsspindly, highly turns out to contain its own solution, especially since many of the data
interlinked cells that pass electrochemical signals between themselves come helpfully prelabelled by the people who created them. Fortified
then perhaps some sort of intelligent behaviour might emerge. with the right algorithms, computers can use such annotated data to
teach themselves to spot useful patterns, rules and categories within.
Caught by the net
The results are impressive. In 2014 Facebook unveiled an algorithm
Neurons are immensely complex. Even today, the simulations used in AI called Deep-Face that can recognise specific human faces in images
are a stick-figure cartoon of the real thing. But early results suggested around 97% of the time, even when those faces are partly hidden or
that even the crudest networks might be good for some tasks. poorly lit. That is on a par with what people can do.

Chris Bishop, an AI researcher with Microsoft, points out that telephone Microsoft likes to boast that the object-recognition software it is
companies have, since the 1960s, been using echo-cancelling algorithms developing for Cortana, a digital personal assistant, can tell its users the
discovered by neural networks. But after such early successes the idea difference between a picture of a Pembroke Welsh Corgi and a Cardigan
lost its allure. The computing power then available limited the size of Welsh Corgi, two dogbreeds that look almost identical (see pictures
the networks that could be simulated, and this limited the technologys above).
scope.
Some countries, including Britain, already use face-recognition
In the past few years, however, the remarkable number-crunching power technology for border control. And a system capable of recognising
of chips developed for the demanding job of drawing video-game individuals from video footage has obvious appeal for policemen and
graphics has revived interest. Early neural networks were limited to spies. A report published on May 5th showed how Americas spies use
dozens or hundreds of neurons, usually organised as a single layer. The voice-recognition software to convert phone calls into text, in order to
latest, used by the likes of Google, can simulate billions. make their contents easier to search.

With that many ersatz neurons available, researchers can afford to take But, although the internet is a vast data rove, it is not a bottomless one.
another cue from the brain and organise them in distinct, hierarchical The sorts of human-labelled data that machine learning algorithms thrive
layers (see diagram). It is this use of interlinked layers that puts the on are a finite resource. For this reason, a race is on to develop
deep into deep learning. unsupervised-learning algorithms, which can learn without the need
for human help.
Each layer of the network deals with a different level of abstraction. To
process an image, for example, the lowest layer is fed the raw images. It There has already been lots of progress. In 2012 a team at Google led by
notes things like the brightness and colours of individual pixels, and how Dr Ng showed an unsupervised-learning machine millions of YouTube
those properties are distributed across the image. The next layer video images. The machine learned to categorise common things it saw,
combines these observations into more abstract categories, identifying including human faces and (to the amusement of the internets denizens)
edges, shadows and the like. the catssleeping, jumping or skateboarding that are ubiquitous
online.
The layer after that will analyse those edges and shadows in turn,
looking for combinations that signify features such as eyes, lips and No human being had tagged the videos as containing faces or cats.
ears. And these can then be combined into a representation of a face Instead, after seeing zillions of examples of each, the machine had
and indeed not just any face, but even a newimage of a particular face simply decided that the statistical patterns they represented were
that the networkhas seen before. common enough to make into a category ofobject.

To make such networks useful, they must first be trained. For the The next step up from recognising individual objects is to recognise lots
machine to program itself for facial recognition, for instance, it will be of different ones. A paper published by Andrej Karpathy and Li Fei-Fei
presented with a training set of thousands of images. Some will
at Stanford University describes a computer-vision system that is able to But doing something in principle and doing it in fact are not remotely
label specific parts of a given picture. the same thing. Part of the problem, says Rodney Brooks, who was one
of AIs pioneers and who now works at Rethink Robotics, a firm in
Show it a breakfast table, for instance, and it will identify the fork, the Boston, is a confusion around the word intelligence.
banana slices, the cup of coffee, the flowers on the table and the table
itself. It will even generate descriptions, in natural English, of the scene Computers can now do some narrowly defined tasks which only human
(see picture below)though the technology is not yet perfect (see brains could manage in the past (the original computers, after all, were
picture on previous page). humans, usually women, employed to do the sort of tricky arithmetic
that the digital sort find trivially easy). An image classifier may be
Big internet firms such as Google are interested in this kind of work spookily accurate, but it has no goals, no motivations, and is no more
because it can directly affect their bottom lines. Better image classifiers conscious of its own existence than is a spreadsheet or a climate model.
should improve the ability of search engines to find what their users are Nor, if you were trying to recreate a brains workings, would you
looking for. In the longer run, the technology could find other, more necessarily start by doing the things AI does at the moment in the way
transformative uses. that it now does them. AI uses a lot of brute force to get intelligent-
seeming responses from systems that, though bigger and more powerful
Being able to breakdown and interpret a scene would be useful for now than before, are no more
robotics researchers, for instance, helping their creationsfrom like minds than they everwere. It does not seek to build systems that
industrial help meets to self-driving cars to battlefield robotsto resemble biological minds. As Edsger Dijkstra, another pioneer of AI,
navigate the cluttered real world. once remarked, asking whether a computer can think is a bit like asking
whether submarines can swim.
Image classification is also an enabling technology for augmented
reality, in which wearable computers, such as Googles Glass or A snare and an illusion
Microsofts HoloLens, overlay useful information on top of the real
world. Enlitic, a firm based in San Francisco, hopes to employ image Nothing makes this clearer than the ways in which AI programs can be
recognition to analyse X-rays and MRI scans, looking for problems that spoofed. A paper to be presented at a computer-vision conference in
human doctors might miss. June shows optical illusions designed to fool image-recognition
algorithms (see picture above).
And deep learning is not restricted to images. It is a general-purpose
pattern-recognition technique, which means, in principle, that any These offer insight into how the algorithms operateby matching
activity which has access to large amounts of datafrom running an patterns to other patterns, but doing so blindly, with no recourse to the
insurance business to research into geneticsmight find it useful. sort of context (like realising a baseball is a physical object, not just an
abstract pattern vaguely reminiscent of stitching) that stops people
At a recent competition held at CERN, the worlds biggest particle- falling into the same traps. It is even possible to construct images that, to
physics laboratory, deep-learning algorithms did a better job of spotting a human, look like meaningless television static, but which neural
the signatures of subatomic particles than the software written by networks nevertheless confidently classify as real objects.
physicistseven though the programmers who created these algorithms
had no particular knowledge of physics. This is not to say that progress in AI will have no unpleasant
consequences, at least for some people. And, unlike previous waves of
More whimsically, a group of researchers have written a program that technological change, quite a few of those people may be middle class.
learnt to play video games such as Space Invaders better than people Take Microsofts real-time translation. The technology it demonstrated
can. Machine translation, too, will be improved by deep learning. It was far from perfect.
already uses neural networks, benefiting from the large quantity of text
available online in multiple languages. No one would mistake its computer translated speech for the
professionally translated sort. But it is adequate to convey the gist of
Dr Ng, now at Baidu, thinks good speech-recognition programs running what is being said. It is also cheaper and more convenient than hiring a
on smartphones could bring the internet to many people in China who human interpreter. Such an algorithm could therefore make a limited
are illiterate, and thus struggle with ordinary computers. At the moment, version of what is presently a costly, bespoke service available to
10% of the firms searches are conducted by voice. He believes that anyone with a Skype account. That might be bad for interpreters. But it
could rise to 50% by 2020. would be a boon for everyone else. And Microsofts program will only
get better.
And those different sorts of AI can be linked together to form an even
more capable system. In May 2014, for instance, at a conference in The worry that AI could do to whitecollar jobs what steam power did to
California, Microsoft demonstrated a computer program capable of real- bluecollar ones during the Industrial Revolution is therefore worth
time translation of spoken language. The firm had one of its researchers taking seriously. Examples, such as Narrative Sciences digital financial
speak, in English, to a colleague in Germany. This colleague heard her journalist and Kenshos quant, abound. Kenshos system is designed to
interlocutor speaking in German. interpret natural-language search queries such as, What happens to car
firms share prices if oil drops by $5 a barrel?
One AI program decoded sound waves into English phrases. Another
translated those phrases from English into German, and a third rendered It will then scour financial reports, company filings, historical market
them into German speech. The firm hopes, one day, to build the data and the like, and return replies, also in natural language, in seconds.
technology into Skype, its internet-telephony service. The firm plans to offer the software to big banks and sophisticated
traders.
No ghost in the machine
Yseop, a French firm, uses its natural-language software to interpret
Better smartphones, fancier robots and bringing the internet to the queries, chug through data looking for answers, and then write them up
illiterate would all be good things. But do they justify the existential in English, Spanish, French or German at 3,000 pages a second. Firms
worries of Mr Musk and others? Might pattern-recognising, self- such as LOral and VetOnline.com already use it for customer support
programming computers be an early, but crucial, step on the road to on theirwebsites.
machines that are more intelligent than their creators?
Nor is this just a theoretical worry, for some white-collar jobs are
The doom-mongers have one important fact on their side. There is no already being lost to machines. Many firms use computers to answer
result from decades of neuroscientific research to suggest that the brain telephones, for instance. For all their maddening limitations, and the
is anything other than a machine, made of ordinary atoms, employing need for human backup when they encounter a query they cannot
ordinary forces and obeying the ordinary laws of nature. There is no understand, they are cheaper than human beings.
mysterious vital spark, in other words, that is necessary to make it go.
This suggests that building an artificial brainor even a machine that Forecasting how many more jobs might go the same way is much harder
looks different from a brain but does the same sort of thingis possible although a paper from the Oxford Martin School, published in 2013,
in principle. scared plenty of people by concluding that up to half of the job
categories tracked by American statisticians might be vulnerable.
These days, anyone with a smartphone has the equivalent of a city-full
Technology, though, gives as well as taking away. Automated, cheap of old-style human computers in his pocket, all of them working for
translation is surely useful. Having an untiring, lightning-fast computer nothing more than the cost of charging the battery. In the future, they
checking medical images would be as well. might have translators or diagnosticians at their beckand call aswell.

Perhaps the best way to think about AI is to see it as simply the latest in Cleverer computers, then, could be a truly transformative technology,
a long line of cognitive enhancements that humans have invented to though notat least, not yetfor the reasons given by Mr Musk or
augment the abilities of their brains. It is a high-tech relative of Lord Rees. One day, perhaps, something like the sort of broad
technologies like paper, which provides a portable, reliable memory, or intelligence that characterises the human brain may be recreated in a
the abacus, which aidsmental arithmetic. machine.

Just as the printing press put scribes out of business, high-quality AI will But for now, the best advice is to ignore the threat of computers taking
cost jobs. But it will enhance the abilities of those whose jobs it does not over the worldand check that they are not going to take over your job
replace, giving everyone access to mental skills possessed at present by first.
only a few.

page 12 Jokowis to-do list

Making Indonesia grow to individual projects, he is open to foreign capital (he has recently been
courting the Chinese).
Indonesias president should ditch his economic nationalism
and, if necessary, his party Yet his second promise, heavy with economic nationalism, runs counter
to the first. Jokowi has recently called for a new economic order free of
HE SAYS it himself: expectations have been high since he became the domination of certain groups and countries, for which read
president in October, after a gripping election showed how Indonesias multinationals and global capitalism (see page 65).
democratic politics are impressively robust. Joko Widodo, or Jokowi as
he is known, promises growth of 7% a year by 2018. His project-based acceptance of foreign capital sends a grudging
message to investors: we want your money, but spend it where we tell
Yet for all his fine aspirations, the country underwhelms. The economy you to. Indonesias negative investment list, a tally of sectors in which
is stumbling, growing by 4.7% in the first quarter compared with a year foreigners may not put their money, only seems to grow.
ago, the slowest pace since 2009. But most worrying is Jokowis
rhetoric of economic nationalism. Rather than an agent of change, he is Jokowi wants a national car project.
sounding more like his tub-thumping predecessors. For the sake of 250m
Indonesians, he needs to change his tune, and fast. His administration has tightened the enforcement of laws demanding
that components of smartphones have to be produced domestically. He
Promises, promises has handed money for infrastructure to inefficient state enterprises.

A typical Indonesian earns half as much as his Chinese counterpart and a And though he once hinted at lifting the job-destroying ban on exporting
20th as much as a citizen of nearby Singapore. The farthest-flung parts unprocessed mineral ore imposed by his predecessor, Susilo Bambang
of the vast archipelago-state suffer from a tyranny of distance, shut off Yudhoyono, it remains in place and Jokowi has fallen silent about it.
not only from world markets but also from the thriving Javanese
economy around the capital, Jakarta. This meddling, nationalist attitude will scare off foreign investors and is
the wrong way to boost Indonesiasprospects. A more open economy is
The country has relied too much on mining for coal and gold, and on essential to Jokowis economic hopes, but his populismthe flip side of
stripping forests to make way for palmoil plantations. Cronyism and his man-of-the-people charmseems to stop him from pointing that out.
corruption have flourished. Jokowi says he will put an end to this. He
promises the better life that has proved elusive for many Indonesians, at His silence also suggests that he is weak within his party, the PDI-P
the same time as he pledges to stand up for his country. (which is led by Megawati Sukarnoputri, daughter of modern
Indonesias founding father and herself a former president).
His clarion call for growth is doing much to change what some call
Indonesias acceptance of mediocrity. Government departments are Jokowi must change. In private he recognises the need for market-
becoming more open. Jokowi acknowledges the importance of friendly measures. But resistance to these comes not just from within a
improving Indonesians poor schooling and the countrys inadequate business establishment built on cronyism but also from within the PDI-P
infrastructure, especially its roads, power and ports. And when it comes itself. If necessary, he should break from the PDI-P to found his own
party, using his popularity to champion the open policies that
Indonesians need if they are to enjoy the life they crave.

page 65-68 Indonesias economy


Spicing up growth

Bad policy as much as bad infrastructure is holding Indonesia striking: from open, affable and welcoming of foreign money to prickly
back and suspicious of it.

IN LATE April Indonesias president, Joko Widodo, better known as In his first seven months as president, Jokowi has tended to present the
Jokowi, wooed foreign moneymen at a big international conference. first face to the world, particularly to potential investors. But Indonesias
Investing in Indonesia will bring incredible profits, he promised. And policies still show too much of the second. That has grave implications
if you have any problems, call me. Two days later, at a summit of for the countrys future.
Asian and African dignitaries, Jokowi struck a different note. He called
for a new global economic order that is open to new emerging Jokowi (pictured) says he wants Indonesia to return to 7% annual
economic powers to avoid the domination of certain groups and growtha rate unseen since the Asian financial crisis of the late 1990s,
countries. but not unusual before it. In fact, the economy is slowing. In the first
quarter of this year it grew by 4.7% year on year, down from 5% in the
That is not necessarily a contradiction: you can pursue foreign cash previous quarter (see chart 1). On a quarterly basis, it has been shrinking
while also arguing that international financial institutions grant for six months now.
developing countries too little power. But the change in tone was
The problem is commodities. Ever since the ancient Romans acquired a state-owned enterprises. Indonesia has inflexible labour laws and
taste for cloves, commodities have played a big part in Indonesias minimum wages have shot up (albeit from a low base).
economy. The country is the worlds leading exporter of palm oil and
tin, the second-biggest rubber exporter and the fourth-largest coal Moreover, a morass of protectionist rules persists. The number of
producer. industries barred to foreign investors, for instance, has grown steadily.
Last year the negative-investment list expanded to include onshore oil
The Grasberg mine in Papua, Indonesias biggest and eastern most extraction and e-commerce.
province, is the worlds biggest gold mine and its third-largest copper
mine. When Chinas hunger for commodities was growing and prices In 2014 the government banned the export of some raw minerals in a
were high, Indonesia boomed. But since 2011 its growth rate has disastrous effort to ramp up domestic smelting; exports of bauxite
declined, reflecting Chinas weakening appetite for raw materials and collapsed from 55m to 500,000 tonnes within a year, without any
the dramatic fall in prices this has precipitated. concomitant rise in alumina or aluminium exports.

Jokowis plan is to rebalance Indonesias economy away from Local-content laws abound, covering energy, retailing and car making,
commodities and towards manufacturing. The country managed a among other sectors. A long-mulled, much-criticised draft law may soon
similar shift once before: in the late 1970s and 1980s, as the price for require companies that sell tablets and smartphones to produce up to
Indonesias then-abundant oil fell, the government tried to attract foreign 40% of their components in Indonesia. The aim is to boost domestic tech
investment in industries like food processing and carmaking instead. manufacturing; instead, it will probably create a flourishing black
market for iPhones and scare off potential investors.
By 1990 manufacturings share of GDP exceeded that of agriculture for
the first time, thanks to a winning combination of low wages, decent Tight immigration rules have cut the number of foreign workers in
infrastructure, a stable investment climate and abundant natural Indonesia by 16% in three years, to just 64,000 in 2014. Foreign doctors
resources (see chart 2). That boom ended with the Asian financial crisis are banned; foreign oil-and-gas workers must be below the age of 55.
and the chaotic fall of Suharto, Indonesias long-serving strongman, in
the late 1990s. Much of this is not Jokowis doing. Economic liberalism has never
really taken hold in Indonesia. Its parliament is always ready to embrace
Indonesia today should be even more attractive as a manufacturing hub. protectionist policies, driven by the widespread belief that foreigners
It is the fourth-most-populous country in the world, with a huge, fast- have long plundered Indonesias resources and left locals none the
urbanising domestic market and a rising consumer class. Workers are wealthier. The Asian financial crisis left Indonesia deeply suspicious of
cheap: the average manufacturing job pays a base salary of $253 per foreign capital.
month, compared with $369 in Thailand and $403 in China.
Demography is in its favour: its median age, 29.2, is well below those Nor is Jokowi blameless. A decree published without consultation in
ofThailand (36.2) and China (36.7). January unexpectedly banned the sale of beer in minimarts and other
small shops across the country, depriving brewers of perhaps half their
But Indonesias bureaucracy is impenetrable and its infrastructure, much revenues and startling investors who now fear more surprise regulations.
neglected since Suhartos day, woeful. Companies spend 50% more on He promised to increase government revenues by bringing more
logistics than those in Thailand and twice as much as those in Malaysia. Indonesians into the tax system, but many foreign firms whisper that tax
No wonder that foreign investment has stagnated in recent years. officials are squeezing them harder instead.
Manufacturings share of GDP, meanwhile, fell from 29% in 2001 to
24% in 2013. Carmaking, led by Japanese firms, is humming along: production is now
rising in Indonesia and falling in Thailand. For the past two years more
Jokowi has taken some steps to reverse this slide. He launched a one- cars have been sold in Indonesia than in any other country in South-East
stop shop for investment approvals in January that has helped speed Asia. But Jokowi has lately promoted the potential for a national-car
progress through Indonesias Kafkaesque bureaucracy (though when scheme in partnership with Proton, the money-pit that is Malaysias
dealing with Indonesian bureaucracy, speed is a relative concept: national car-maker.
according to Wellian Wiranto of OCBC, a Singaporean bank, the one-
stop shop has reduced the number of days required to obtain a permit to Jokowis supporters say he has the right ideas, and stress that he faces
build a power plant from 923 to 256). strong opposition. But whether bad policies are enacted with Jokowis
support or because he is powerless to stop them matters little: eitherway,
Using savings from the welcome cutting of fuel subsidies late last year, they hinder investment that Indonesia sorely needs.
Jokowi has boosted the budget for infrastructure by 53%the biggest
year-on-year increase in Indonesias history. Better roads and ports Geography already puts Indonesia at a disadvantage: it sprawls across
should drive down logistics costs. Some of the money is for much- more than 13,000 islands, which means that getting goods from one
needed power plants: Indonesia has five times Britains population, but place to another will always be more complicated (and expensive) than
just half of its generating capacity. He has also sought out foreign just putting them on a lorry. But that makes good policy all the more
investment for infrastructure projects. crucial. When commoditieswere in demand, Indonesias business
environment mattered less: companies that wanted tin and copper had to
But many businesspeople worry that the results will not match the go wherever they could be found. Manufacturers can be choosier.
rhetoric. Much of Jokowis infrastructure money will go to inefficient,

page 14 Bribery
Daft on graft

A hard line on commercial bribery is right. But the system is the hundreds of millions of dollars as well as prison terms for palm-
becoming ridiculous greasing managers. It is right that bribery should be punished.

IN 2008 Siemens, a German conglomerate, was fingered for handing out The economic effects of graft are insidious. Bribery distorts competition
bribes in emerging markets. It has since spent a staggering $3 billion on and diverts national resources into crooked officials offshore accounts.
fines and internal investigations to atone for its sins. Half of that has But the cost and complexity of investigations are spiralling beyond what
gone to advisers of one sort or another. Walmart, an American retailer, is reasonable, fed by a ravenous compliance industry of lawyers and
will soon have spent $800m on fees and compliance stemming from a forensic accountants who have never seen a local bribery issue that did
bribery investigation in Mexico. The most complex bribery probes used not call for an exhaustive global review; and by competing prosecutors,
to take three years. Now they last an average of seven. who increasingly run overlapping probes in different countries.

In recent years lots of big economies, from Britain to Brazil, have To stop a descent into investigative madness, enforcement needs to be
followed Americas lead in tightening anti-bribery enforcement (see reformed in four ways. First, regulators should rein in the excesses of the
page 62). Offences that once drew a slap on the wrist now attract fines in compliance industry and take into account the cost to firms of sprawling
investigations. When firms admit to having uncovered bribery among would have the advantage of establishing clear precedents. When firms
their managers, regulators expect them to investigate themselves. are loth to go to trial, because they are worried about the financial costs
of a criminal charge, the terms of settlements should at least undergo
The authorities should tell them what level of investigation they want so more judicial scrutiny.
that companies are not overzealous out of fear of seeming evasive. This
is slowly starting to happen, with officials telling firms they should not Lastly, anti-bribery laws should be amended to offer companies a
aimlessly boil the ocean. compliance defence. If firms can show that they had sound anti-
bribery policies, that they were making reasonable efforts to uphold
Second, governments should lower costs by harmonising anti-bribery them, that the wrongdoing did not involve senior managers and that they
laws and improving co-ordination between national probes. The OECD, came forward to the authorities promptly, the penalties should be greatly
whose anti-bribery convention has gained wide acceptance, is the natural reduced.
body to lead this effort.
As corrosive as bribery is, the response must be proportionate.
More justice, please Investigations that dragon are a waste of management and public
resources. The starting-point for up to half of all cases is a firms
Third, more cases should go to court. Too often, prosecutors strong-arm voluntary disclosure, but if costs continue to rise then firms may be
firms into agreeing to settlements based on controversial legal theories more tempted to bury their bad news. Anti-corruption campaigners
(one being peddled by American law enforcers is that hiring relatives of would have nothing to cheer if the cure ended up being more harmful
well-connected officials counts as bribery). Taking such matters to court than the disease.

page 62-63 Corporate bribery


The anti-bribery business

As the enforcement of laws against corporate bribery increases,


there are risks that it may go too far Though America remains the toughest enforcer, in the past few years
other countries have started to flex their muscles (see chart 2, next page).
EVEN for a company with Walmarts heft, $800m is a sizeable sum. This second group includes Germany, South Korea and Britain, which
That is what the giant retailer will have spent by the end of this fiscal consolidated and improved upon a hotch-potch of previous legislation
year on its internal probe into alleged bribing of Mexican officials, into with its Bribery Act of 2010.
whether subsidiaries elsewhere may have been greasing palms and on
related compliance improvements. Brazil has passed a new law and is using it to go after firms caught up in
the Petrobras scandal. Chinas anti-corruption drive under Xi Jinping has
By the time bribe-busters at Americas Department of Justice (DOJ) are ensnared GSK, a British drugmaker. It was found guilty last year of us-
done with their own investigation, which began in 2012, Walmarts bill ing travel agencies to create bribery slush funds and fined $490m
for lawyers and forensic accountants fees will be well above $1 billion though local managers got away with suspended sentences because the
and perhaps closer to $2 billion. To that can be added whatever fines company showed remorse.
it may incur, any bills for settling related private litigation, and the
harder-to-quantify cost of the tens of thousands of man-hours managers Enforcement remains patchy. In much of Africa, relevant laws (if they
have spent on what has become a big distraction from everyday busi- even exist) are unenforced. Around half of the 41 signatories to the
ness. OECDs anti-bribery convention have yet to impose any sanctions. But
there is no doubt about the direction of change.
The case is not trivial, to be sure. It involves suspicions that bribes were
paid to clear the way for construction of dozens of new stores and ware- As the chance of wrongdoing being detected grows, so does the chance
houses, thus helping Walmart to outflank competitors. The case as been of the investigation being messy and multi-jurisdictional, with several
widened to include the granting of permits in China, Brazil and India. countries looking for redress, says Crispin Rapinet of Hogan Lovells, a
lawfirm.
There should be no complaint that such cases are being scrutinised
closely: the corrosive effects of bribery, in eroding trust in government The costs can keep coming in after a company has paid for an investiga-
and dampening innovation, are well documented. tion and a settlement to prosecutors. Increasingly, firms are required to
bear the cost of being overseen for several years by an independent com-
Nevertheless, some see the expensive and time-consuming Walmart case pliance monitor.
as part of a mounting body of evidence that the war on commercial
bribery is being waged with excessive vigour, forcing companies to be Firms that have recently been involved in bribery investigations may
overcautious in policing themselves. Some of those under investigation also be excluded from procurement processes, may suffer a higher cost
are starting to push back. of capital (large fines can trigger creditrating and loan-facility reviews),
and be hit by shareholder lawsuits.
Until a decade ago, giving bribes to win business or speed up transac -
tions was widely seen as a necessary evil, especially in emerging mar- Siemens, a German industrial group, has spent more than $3 billion on
kets. In parts of Europe, companies were even allowed to deduct kick- bribery related fines and costs since 2008. Its compliance department
backs they had paid against tax. But anti-bribery enforcement has been has ballooned from a handful of people to more than 400. Avon, an
transformed since the early 2000s, when NGOs started to raise a stink American cosmetics company caught bribing in China, spent nearly
and America stepped up use of its Foreign Corrupt Practices Act $350m on a variety of legal and compliance fees, more than double the
(FCPA). penalties it incurred, and not far short of its 2014 operating profit.

This law was passed in 1977, but in its first quarter-century it was At worst, the overall financial consequences can be more than ten times
largely ignored by prosecutors. As recently as 2007, the largest fine un- the settlement a firm agrees to pay prosecutors, calculates Mike Koehler
der the FCPA was less than $50m. Now the worst offenders pay 10-15 of Southern Illinois University, who writes the FCPA Professor blog.
times that. Foreign firms, if they have a presence in America, can also be
caught in its prosecutors net. The huge amount of work generated for internal and external lawyers
and for compliance staff is the result of firms bending over backwards to
Alstom, a French industrial group, paid up $772m last year in the largest be co-operative, in the hope of negotiating reduced penalties.
FCPA criminal penalty to date, after allegations it had spent $75m on
bribes in countries including Egypt and Indonesia. Some are even prepared to waive the statute of limitations for the con-
clusion of their cases. They want to be sure they have answered the
2014 was a record year for FCPA penalties (see chart 1, next page). This Where else? question: where in the world might the firm have been
year is shaping up to be busy too, as newfronts are opened up to probe, engaging in similar practices?
for instance, the hiring by banks of princelings (relatives of important
Chinese officials).
In doing so, businesses are egged on by what Mr Koehler calls FCPA Ask Marubeni of Japan, whose coyness towards the DOJ led to its being
Inc. This is a very aggressively marketed area of the law, he says, forced to plead guilty and pay an elevated fine. This hands prosecutors a
with no shortage of advisers financially incentivised to tell you the sky lot of discretion. The FCPA often means what enforcement agencies
is falling in. say it means, says Mr Koehler. We have only a faade of enforce-
ment. That matters all the more since other countries are copying the
Convinced that it is, the bosses of accused companies will then agree to American approach: Britain, for instance, has allowed deferred prosecu-
any measure, however excessive, to demonstrate that they have compre- tion agreements since 2013.
hensively answered the Where else? question.
Some companies are starting to resist prosecutors expansive legal inter-
So much so that even some law enforcers have started telling them to pretations. Wall Street bankers have recently locked horns with govern-
calm down. Last year Leslie Caldwell, head of the DOJs criminal divi- ment agencies over their reading of the FCPAs stance on hiring rela-
sion, said internal investigations were sometimes needlessly broad and tives of senior officials in China. The moneymen dispute the claim that
costly, delaying resolution of matters. We do not expect companies to hiring someone with the intent of winning business could itself be ille-
aimlessly boil the ocean, she said. gal.

Her words have provided scant comfort: defence lawyers say that their In the few cases where matters do reach court, the results are mixed.
clients feel that if they investigate problems less exhaustively, they risk Last year a federal court approved the DOJs broad definition of for-
giving the impression that they are withholding information. eign official, to include some managers at partly state-owned firms.

Some say the DOJ is maddeningly ambiguous, encouraging firms to However, another court dismissed an indictment against two Ukrainians,
overreact when allegations surface. It does not help that it has cut its in a case in which the only American link was the tangential involve-
staff-training on how to run such complex cases. ment of a federal agency. The judge said he had never seen a more mis-
guided prosecution, and accused the DOJ of foolishly trying to play
Partly as a result of this, and partly because bribery schemes are growing bribery policeman to the world.
more sophisticated as law enforcers up their game, cases are taking
much longer to resolve than they used to. Big ongoing cases, such as In 2013 Britains Serious Fraud Office suffered several embarrassing
those of Alstom and Walmart, may stretch for up to ten years; in con- setbacks in court, including the collapse of a case against Victor Dah-
trast, that of Siemens, the giant case of the past decade, took under three. daleh, a billionaire who had been charged with paying bribes to Bahraini
In a recent article Paul Pelletier, formerly a senior prosecutor, argued officials on behalf of Alcoa, an American firm.
that the DOJs processing of cases has become so drawn out that it
nowoversees a bribery sinkhole. Such occasional defeats showthat bribery cases, which rely on tracking
international paper and money trails, can still be hard to build. But more
Others worry that the America-centred model that has emerged for re- countries are trying, which means that firms under investigation will in-
solving international bribery cases fails to deliver justice. More than creasingly find themselves pursued from several directions.
four-fifths of FCPA cases against companies since 2010 have been set-
tled with deferred-prosecution or non-prosecution agreementsthat is, Different countries will not necessarily take each others penalties into
out-of-court settlements in which the prosecutions case does not un- account. Even allies like America and Britain are not beyond conducting
dergo the scrutiny of a judge. duplicative probes, as Alstom can attest. Nathaniel Edmonds, a former
government FCPA lawyer now with Paul Hastings, a law firm, does not
In the laws 38 years, only one case against a public company has gone think enforcement has gone too far. But he accepts that it can be ex-
to trial. When settlements are announced, there is often sparse detail, and traordinarily difficult [for firms] when numerous governments are in-
thus little on which to build a body of case law. volved, with sometimes competing interests.

Surely companies with a strong defence would refuse to roll over and Klaus Moosmayer, chief compliance officer of Siemens, says the lack of
settle? Not necessarily. Even those that do have a good case are scared co-ordination in cross-border investigations is a huge challenge for-
to fight and risk a criminal indictment that would clobber their share business. The largest multinationals will always have the occasional
price. It is commercially rational to roll over, all the more so given how case of suspected bribery. They need reassurance that if they disclose it
severely any failure to co-operate is punished. they wont be punished twice.

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