Microsoft is using a new technology when it comes to Windows Phone 7 and piracy, at least compared to anything they’ve tried with Windows Mobile. They are using a PVK (Private Key) system in which every device is given a unique ID during the manufacturing process and that ID is routinely checked against Microsoft’s servers. If this check fails, you will get a message like the one above. “If the keys cannot be found, the motherboard must be replaced or serviced. While elements of the phone/OS might still work without the PVK key, core elements such as Xbox, Marketplace, Windows Live or Zune…basically any ‘cloud service’ will not.”

This Service Advisory aims to resolve invalid PVK or PVK missing issue for any returned WP7 units

If the PVK is invalid or missing, there will be message on device as following when user try to login to Windows Live service.

We already knew Microsoft was trying to make WP7 a closed environment, but how will this affect the development communities like PPCGeeks and XDA-Developers? The US has only had these devices in stores for about a month, and with a young OS, there’s plenty of time to see what happens, but also plenty of time for Microsoft to patch any holes that may be found.

Source: WPCentral