The pirated copies go on a variety of machines, quite a lot of OEM vendors sell computers (I've noticed laptops are especially bad for this) with XP on, but with no recovery CD, so when it comes to do the 6 monthly reinstall you don't have anything to put back on. This is where a ripped off copy comes in
not that I am advocating Piracy at all
Of course if MS didn't charge so much for Windows people would be far less likely to get pirated versions, there will of course always be someone who does, but the main part of the population would go legit.
Some older machines can cope with XP, but most run 2K much much better - must be the lack of candyfloss graphics
- There is also a theory that a lot of 'custom PC building' companies (which are quite often one man outfits in my experience) are bad for it. Customer asks for XP so the person building the PC puts a copy of XP on there. The Customer is then technically at risk from MS's lawyers. Doesn't overly bother me though in that a) I build my machines myself and b) even if I didn't I wouldn't want XP on there!
AFAIK GMorgan when they make it compulsory it will apply to all updates, including critical and security. As much as I would love to slate MS for this, I really can't they are well within their rights to restrict the ability of pirated copies to use their update service. I do think though that the only people they will only hurt is themselves, the few people who are determined to run ripped off copies will no doubt find a way to crack it (Especially given MS's history in terms of software bugs)
I think once this comes into effect, as long as people are made aware of the alternatives we should see quite a large migration away from Windows. Some people do not want to give MS that amount of money, and some people simply cannot afford to.