Microsoft account (formerly Windows Live ID) is not required for the device to work, but enhances the experience.
To make the most out of your Lumia, it is highly recommended to either sign in with one of your Microsoft Accounts or create a new Microsoft Account. If you already have any of the below accounts, you can use them to login when your Lumia asks for your Microsoft Account credentials. · Xbox Live · Hotmail, MSN or Outlook.com · Windows Live ID · Microsoft Account Having a Microsoft account gives you a lot of benefits: · Download apps and games from Windows Phone Store (Microsoft Marketplace) · Automatically sync your contacts and calendar to Outlook.com · Upload, store, and share pictures, video clips and documents on OneDrive · Keep track of and lock your lost phone with Find My Phone · Get your gaming achievements on your phone, and add to them when you play games on your phone
Creating the Microsoft account is very easy. To find out more about the Microsoft account, please visit Microsoft’s web site:http://www.windowsphone.com/en-GB/how-to/wp8/start/microsoft-account