This is possibly to dumbest DRM scheme I have heard of; if your intent is to alienate your customer, I don't see how they could have worked it better.
Sadly, though, I don't see how it could have turned out differently. Companies are going to escalate their DRM and security measures until they get rid of piracy, or until they drive everyone to a console (which is essentially the same thing to them).
Sad to say that in my case it actually worked. I bought a PS3 a few months ago when the priced dropped to $300. Crazy DRM schemes wasn't the only reason (I also got it for the Blu-ray player and the multimedia capabilities), but it is what probably pushed me off the fence.
I must say, that I got Assassin's Creed II for PS3 a couple weeks ago (yeah, yeah, a little late, but I had several games as Xmas gifts that needed playing first). I am actually happy that i was able to avoid all this Ubisoft PC junk and just play the game.
I am NOT a console fanboy***. I hadn't seriously played a console since the Atari 5200 in the mid-80's (I was 8 or 9 when my Dad bought it, I think) prior to buying the PS3. I, in fact, have looked down on console gamers in the past. However, the way the gaming situation is getting for certain PC games, I almost think it is worth it just to get a console and be done with it.
***If they ever start releasing decent turn-based strategy games (like a Total War type game) on a console, without dumbing it down, I may become an actual fanboy. :P