They won't do a USB dongle for 2 reasons:
1) it costs $3-$12 per system, and that would devastate Windows profit margins (OEM pricing is treated as a loss-leader to drive MS-Office sales, why do you think the OEM pricing deals are all under NDA's).
2) Dongles reduce purchase rates by 40-60% unless there's no other choice because, let's face it, nobody likes to be treated like a criminal with an electronic shackle (which is how most users view a dongle).  Microsoft lobbied to have the law changed to allow online "Activation" specifically because it allowed them to have much of the user-tracking power of a dongle without the same negative impact on most users.
That's why you only see dongles used in small market applications, the users generally have no viable alternative, and the base price is more than high enough that an extra $15 or so is completely invisible.

Microsoft has to keep 2 constituencies happy, or at least lulled into a comfortable stupor, and neither group is going to appreciate a dongle device.
1) OEM's (like their lap-dog, Dell) who will continue to preload Windows on all machines, and either offer no alternatives, or still charge for a Windows license, and charge extra on top of that for the "effort" to load something else.
2) Large corporate IT buyers, who buy in lots of 2000 or more, and could actually force the large OEM's to offer an alternative (such as a Linux system, or at least a system with OO.o instead of MS-Office) without charging the MS license (and without contributing to MS profit margins).
As long as those two groups continue to buy into the MS mindset, MS retains their monopoly.  Once either one of those groups changes direction, MS is in a world of trouble, because the IT buyers are the MS cash cow, and the OEM's drive the home market; home users just buy whatever's pre-installed, I've quietly pre-installed Linux on some home users' machines lately, and they've barely even noticed until something unusual (one IE-only website, one wireless WPA, one tried a kids game) didn't work, and that's getting less common.  Even when they did realize they aren't running Windows, the most I've heard is "Can I still work with my documents", once they find out the answer to that is yes, they have all, so far, been just fine with Linux.  About the only areas where Linux still needs some
help is Wireless support on laptops (minimal WPA support), some peripherals, and the big commercial games, and these don't matter much to a majority of home users.  Of the home users I know, I'd say 90% run nothing but OO.o type applications, web browsing, and email.

==Joseph++

P.S. sorry for roaming a bit far on the last paragraph, but it's good to note how little difference there is between Linux and Windows for most home users.

P.P.S. Don't you all hate the word "dongle", whoever chose that term for USB Keylock devices should be pilloried.

Also, Did anyone else notice that Adtron (the host for devel meetings) got a mention on INQ (http://www.theinquirer.net/?article=27215)?

FoulDragon@aol.com wrote:
> In a message dated 10/25/2005 7:46:47 PM US Mountain Standard Time, 
> craigwhite@azapple.com writes:
> 
>>If the system were purchased from a normal
>>vendor, the install codes for that machine would be on the certificate
>>affixed to the computer itself.
> 
> 
> Sorry, thanks for playing.
> 
> Stick-on certificates didn't show up til like the year 2000.  I've seen them 
> in 98SE flavours, but it's entirely possible you'd not have one on a 98SE box.
> 
> The copy of Win98SE I bought at Fry's in 1999 had the certificate as the 
> front page of the manual.  It was an OEM copy, presumably the most likely sort to 
> be packaged with a certificate you'd permanently bind to a case.
> 
> The copy of Win95 that came with my P100 had a free-floating CoA which 
> promptly got lost when I wanted to reinstall it.
> 
> And a stick-on certificate is monumentally stupid.  If you change the case, 
> it disappears.  The machines in at least one of the labs at ASU (2nd floor GWC 
> east side) had the stickers defaced to unreadability and-or peeled off by 
> fidgety students, so they're obviously not impervious.  If you spend hundreds of 
> dollars extra for a premium case and paint job (ie Falcon Northwest or Voodoo), 
> you don't want an ugly sticker on it.
> 
> Why oh why can't they just do a #(%# USB dongle or something similar?  It's 
> keygen-proof, it's transferrable between systems or through upgrades, and we 
> all have 900 extra USB ports we don't need anymore.
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