Um, isn't that pretty much what cookies do?
Sounds like a lot of hype for already existing harmless but useful technologies (which could be abused, yes, if you have not done a proper background check on your corporate IT staff...).
Take a look at security audit logs on a windows domain server... much more useful info on a corporate network. This stuff is nothing new, just a new PR spin on it. (and I can make samba on *nix do the same - so don't give me that big scary MS hoopla) Webserver log analysis is nothing new either, and is not restricted to windows servers...
Better yet, take a look a the specs of 21 CFR Part 11 and implementations such as http://www.nugenesis.com/ This is useful technology people. Yes it can be abused, like any other technology, but does that mean we should abandon it? No.
http://www.fda.gov/ora/compliance_ref/part11/
http://www.access.gpo.gov/nara/cfr/waisidx_02/21cfr11_02.html
Sheesh, the security/privacy paranoia is beginning to reach frenzied levels. (And I'm the suspicious type!) No wonder I'm having such a hard time fighting software firewalls (that can't be trusted to do their intended job anyway...)
Actually, this would monitor anything that you do on your computer. If you run MS office, they would know when you reconnected to the internet and it sent it's little message back to Microsoft. If you ran a movie, if you recorded it's name or the tag was read, it would redirect it to Microsoft or whoever had the program running. In return, it could analyze when you went to a site, or if you had a pop up allowed, to advertise to you on upcoming releases of that genre of movies, or any number of other uses.
Originally if I recall this was NOT to get advertising information nor to sell it. It first became idealized by MS when first trying to implement piracy controls into their New OS. From what I understand that was scratched, NOT because they couldn't do what they wanted, but because they couldn't get people to cooperate with their idea. Originally their system would analyze what ever you ran on the system and if it determined that the item was illegal, force the system so that it could not run the item. After it was identified, you would no longer be able to run it on the computer, even if you ran linux. The idea was that it would be based in the processor, and hence they were trying to strong arm Intel and AMD into integrating windows OS integration into their very processors. It looked like it was going to work but then one of them started to shirk out(can't remember which one) and then the other shirked, and that was that.
However, MS continued to advance the idea so that on Windows, though I doubt it will be integrated in (if they are really trying to push this however, perhaps there is a hidden agenda still to do it), in this point that of course Windows knows whatever you run on it. Anytime you run a process the system is aware. It's only a little matter to make a log that it then can be transformed into communication so that they or someone else can use that information. In that way they attain that information. However, to tailor it to the person, they wouldn't phrase it as such, instead they would say that by knowing what you are using, they can better tailor the system to your needs. You use Windows Media Player and DVD creating software a lot, they can send you newstories to "Your MSN" on those subject, along with the latest advancement, weblinks to where Microsoft actually has programs to improve your speeds and ability to do such (perhaps for a price), and you can download from your home without ever leaving your computer to attain "upgrades" specialized to your needs. Somewhat like what Windows Update does now, integrated with the XP ability to speed up access to commonly used programs, and the DRM process already in place.
However, from everything I've heard they had no intention of integrating it, at least with the next version of Windows (though they have around seven versions of Vista that they'll be coming out with sooooo.....), however, if they have actually finished up with the ability and the process, I can understand why they might want to patent the process before another company does. In truth, it's probably better with them than with some other less savory companies (even if you hate MS, there are others that ARE worse).