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At startup, Windows looks at the install date (located in the registry), and compares it to the current date. It then calculates how many minutes that is, and starts a timer in the background counting down the minutes. Once you are out of minutes - you have to activate.

The process does not run when users ‘save’ a virtual machine, or presumably use hibernation. So, if the user never shuts down or restarts, they could conceivably use Windows Server indefinitely before activating. The fix we suggested to Microsoft: have Windows recalculate the activation days remaining every few hours, or on resume from hibernation, or to when a virtual machine is resumed from a saved state.

“The timer in Windows is tracking how long the product has been used rather than how long it has been installed. However, the need for regular system maintenance that requires a restart negates the length of time a user might extend the activation deadline. Artificially protracting the activation period by saving state and not restarting could prevent important and high-priority updates that are critical to the security and reliability of your computer,” said Ward Ralston, group product manager for Windows Server.

While Microsoft suggests that users update their systems as a best practice, my take is that not everyone cares about updates - updates do not matter in a test environment without an Internet connection.