Microsoft’s new verification system for Windows 8 is causing headaches for notebook ODMs and OEMs, according to reports.

ODMs, who create and manufacture products to be branded by big vendors, are arguing over who shoulders the cost for implementing Microsoft’s new activation protection system. DigiTimes reports that Microsoft’s new OEM BIOS activation (OA) 3.0 technology creates additional costs for ODMs and they are pushing the big brand vendors to pay the extra costs. Microsoft’s OA 3.0 technology means the company will pre-install Windows 8 into a PC’s BIOS, allowing end users to key-in a product key to activate the software online. Microsoft is believed to be dropping the COA label from production. The lack of label and an attend time per PC could result in higher production costs for ODMs and cases where the manufacturers install copies twice on a machine due to overlap. Microsoft is reportedly charging a fee per number of installations.

Microsoft has used OEM BIOS activation in previous versions of Windows. The protection allows PC makers and system builders to pre-activate copies of Windows for use on their hardware. OEM BIOS activation (OA) was originally introduced with Windows XP. Microsoft shipped OA version 2.0 with Windows Vista. The software giant is now readying OA version 3.0 for Windows 8. Microsoft is working on a key new technology that will enable it to protect against activation hackers. Illegal copies of Windows have been widely circulated thanks to mechanisms created to bypass Microsoft’s OEM activation certificates. Windows Vista and Windows 7, which both rely on OA version 2.0, have fallen victim to activation cracks and bypass methods. In July 2009, months before its release, Windows 7 was fully cracked and activated with an OEM master key. Microsoft is keen to avoid the same cracks with Windows 8.