Microsoft KMS (Key Management Service) is the mechanism used to activate Windows licenses in the larger corporate sites.
Unlike regular activation, KMS uses a centralized corporate-provided KMS Server (instead of going to Microsoft) to perform activations of Windows and Office licenses.
How does a KMS client (Windows or Office) locate the local KMS server?
It uses DNS records.
Note: In order for a standalone / non-domain / non-domain-joined KMS client to successfully look up a KMS server, it must be configured to use a “Primary DNS Suffix” (and a “DNS Suffix Search List” and a DNS record of type: SRV and name: “_vlmcs._tcp” must exist in the search domains.
Note: If a Primary Dns Suffix is not set for the KMS client PC, the activation mechanism will not even send out a request to the DNS server, and will instead display an error of type 0x8007007B.
To check that a DNS Suffix is defined:
- open a CMD prompt
- type: ipconfig /all | find /i “Suffix”
- the DNS suffixes (primary and search) should be displayed
To check that the proper DNS record for KMS Server Auto-Discovery exists:
- open a CMD prompt
- type: nslookup -type=SRV _vlmcs._tcp
- If a DNS record is found, it should be displayed
- Remember: the client must have a Primary DNS suffix configured for this to work
For a more fully-featured explanation, here is another blog entry that contains more detail: