Key Management Service

KMS (Key Management Service) is one of the methods to activate Microsoft Windows and Microsoft Office. Activation ensures that the software is obtained from and licensed by Microsoft. KMS is used by volume license customers, usually medium to large businesses, schools, and non-profits. Individual computers do not need to contact Microsoft, although the KMS server does. KMS clients must be activated at least once every 180 days. A KMS client will try to activate once every 7 days, and if it fails it will try again every 2 hours. The KMS server can be automatically detected by DNS if the proper DNS record is present, or it can be manually entered using the "slmgr" command. There must be at least 25 KMS-activated computers (5 for Windows Server) on the network to use KMS. If the KMS activation fails (for example, because the KMS server is not available or there are less than 25 computers on the network), a watermark telling the user to activate Windows will appear in the bottom right corner of the screen.
Exploits.
There is an unofficial KMS server emulator that will activate Windows or Office even if the software was not licensed or paid for, and regardless of whether or not there are 25 or more computers on the network. There is also a program that will send KMS requests to a legitimate KMS server, in order to fool the server into thinking that there are 25 or more computers on the network. Microsoft considers both of these exploits to be a violation of the Terms and Conditions.