OEM licensing confusion starts at Microsoft.com

OEM licensing confusion starts at Microsoft.com

Summary: Microsoft’s members-only OEM Partner Center contains a perfect example of how much confusion surrounds the subject of Windows licensing. Two pages on this supposedly authoritative information source for OEMs contain answers that are completely contradictory.


Last week, in the wrap-up for a post about WGA, I offered five suggestions I’d like to see incorporated into Vista and especially into Windows 7. Number 1 on the list was a request to make Windows licensing and activation simpler. I noted:

It is almost impossible for mere mortals to understand the nuances of OEM SLP activation and why the product key on the sticker on the side of your PC won’t work after you reinstall Windows. Corporations can pay people to figure this stuff out. Consumers and small business people shouldn’t have to.

Today, as I was poking around Microsoft’s OEM Partner Center (restricted to enrolled members only), I found a perfect example of how much confusion surrounds the subject of licensing. Can an end user purchase an OEM System Builder copy of Windows and use it to build his/her own PC? Absolutely yes! Definitely not! Seriously, two pages on this supposedly authoritative information source for OEMs contain information that is completely contradictory. No wonder mere mortals get confused by this stuff.

Back in August 2005, Microsoft made some substantial changes to its license for OEM System Builder copies of Windows. Previously, the terms for these Windows versions were simply ridiculous. You could buy an OEM copy of Windows from a reseller such as Newegg or Mwave, but only if you purchased a “qualifying non-peripheral computer hardware component” with it. As a result, resellers had to go through the charade of bundling a 99-cent power cable to make the purchase legal, and then they had to keep a record of the bundled purchase in case Microsoft did an audit of their sales.

As I noted back then, the new license terms were considerably saner. Microsoft introduced a single-pack edition of its OEM System Builder software and allowed resellers to distribute unopened packages to another “system builder” without requiring a trivial hardware purchase. In the documentation announcing the change in license terms, Microsoft specifically noted that end users could take advantage of this option as well, as long as they were building a system for their own use. The following language was included in a web page at the OEM Partner Center and in a PDF handout made available for OEM partners:

OEM system builder software packs are intended for PC and server manufacturers or assemblers ONLY. They are not intended for distribution to end users. Unless the end user is actually assembling his/her own PC, in which case, that end user is considered a system builder as well. [emphasis added]

In late 2006, I downloaded that PDF file, bookmarked that web page, and took a snapshot of the page as well, thinking it might come in handy some day. I’ve referred to that language repeatedly when writing about OEM licenses over the past few years, and I’ve checked those pages as recently as December 2007.

I can no longer find the PDF document on Microsoft’s website, but I still have a copy saved locally. Here’s a picture of the relevant portion (I've used a yellow highlighter to mark the relevant portions of each graphic in this post):

Changes to OEM System Builder licensing, PDF from Microsoft.com

Fortunately, the page I quoted from more than three years ago, Simplified OEM Licensing, is still available, with a 2008 copyright date attached to it. It begins with this unintentionally ironic text:

Software licensing is not an easy subject to understand. Some of our previous requirements raised questions such as, "What is non-peripheral hardware?" "Why are the distribution and preinstallation requirements different for Windows and Office?" and "What can and can’t I do with OEM system builder software and hardware?"

That is why Microsoft has simplified the OEM system builder license for you.

At the bottom of that page is a three-part section entitled “Scenarios,” which ends with a graphic and caption containing the text shown below. This text has been there since August 2005:

Changes to OEM System Builder licensing, web page from Microsoft.com

Sounds pretty cut and dried, until you scour the Microsoft site for additional details. This page, Windows Licensing for Do-It-Yourself PC Hobbyists, does not appear to be linked from anywhere else on the OEM Partner Center. I found it only by running a custom search within the OEM Partner Center using the keyword hobbyists. (The page is also not in the Windows Live Search index, and a Google search turns up links to it from only a handful of external pages, mostly translations on foreign-language sites at Microsoft.com.) Here’s how the page begins:

There is a growing market for “do-it-yourself” home PC hobbyists who assemble PCs from components for their own use. Microsoft retail software licenses are the appropriate licenses for the do-it-yourself market. OEM System Builder software is not intended for this use, unless the PC that is assembled is being resold to another party. Please see further clarification below. [emphasis added]

And here’s a snapshot of the top of the page:

Windows Licensing for Do-It-Yourself PC Hobbyists, web page from Microsoft.comWell, there you have it. Microsoft sets up an information center for its OEM partners, but the information varies depending on which page you visit. And if you find the right two pages, you can find information that is absolutely, completely contradictory.

Like I said, it’s almost impossible for mere mortals to understand the nuances of this stuff. Even when they work at Microsoft.

Topics: Hardware, CXO, Microsoft, Operating Systems, Software, IT Employment, Windows

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  • Vedddddy interesting...

    Have you contacted them to say "Oh Ballmerrrrrr....you got some 'splainin' to do"?
    • I think I just did...

      ...as soon as I clicked the Publish button. This site gets read in Redmond!
      Ed Bott
  • The true question is what holds up in court...


    -I purchase an OEM copy of Windows from Newegg AND
    -I install said copy of Windows on my DIY PC AND
    -I activate said copy of Windows on said DIY PC AND
    -I neither distribute it nor replace my mobo AND
    -I somehow end up in court proving all of the above THEN

    this would turn into quite a case precedent debacle.

    • Especially...

      ...when you show the judge the pages from Microsoft's website, which I saved for you as Exhibits A, B, and C!
      Ed Bott
    • You're legal...

      It is really simple?


      -You purchase an OEM copy of Windows from a software reseller, selling you an official legitimate OEM license ? AND -
      -You install said copy of Windows on your DIY PC - AND -
      -You activate said copy of Windows on said DIY PC - AND -
      -You neither distribute it nor replace my motherboard, processor etc. - AND -

      YOU WOULD NEVER END UP IN COURT... You have a legal copy of the operating system...

      The problems with OEM come if you want to begin changing things without purchasing another OEM copy (Motherboards, Processors, etc. because now you have a new PC). Retail Boxed licenses let you do that...

      OEM is cheap because it is essentially a throw-away license when you retire your machine.

      Buy OEM to your hearts content, and live with the license agreement terms, that you agree to, when you install the software?

      Here is the Microsoft page to explain OEM better:
      Transfer of License FAQ's: http://oem.microsoft.com/script/contentpage.aspx?PageID=552846#faq2

      Refurbished, AKA Rebuilt PC FAQ's: http://oem.microsoft.com/script/contentpage.aspx?PageID=552846#faq3

      MS Licensing & Anti-Piracy page: http://www.microsoft.com/oem/sblicense/Licensing_AntiPiracy.mspx
      • Microsoft Offers No Guarantees for WGA and SPP

        or any of their other works, for that matter.

        Perfectly legal OEM licenses for unaltered HP, Dell, Gateway and other companies' computers were the first wave of WGA mis-validation to sweep over the world.

        OEM licenses are simply risky when dealing with Microsoft. Customers doing so should keep shortcut links to the Better Business Bureau and Federal Trade Commission close at hand on alternative computers.
        • Please,

          show us the guarantees offered on any OS X or 'nix work.
          • Microsoft Is Utterly Unique

            With a mis-validation rap sheet like this.

            Mis-validation with damages to small businesses:







            More mis-validation cases:













          • link spam

            doesn't answer the question.

            Please, show us the guarantees offered by the alternatives to windows.
          • I Provide References

            something with which you are obviously completely unfamiliar. Wilfully so, I'm sure, considering that the documented record completely refutes your blind slavish devotion to Microsoft.

            I show that Microsoft is disreputable and engages in business practices that inflict harm on its honest customers. Microsoft's documented behavior over the past two years shows that Microsoft will step on anyone they please, whenever they please, however they please, without so much as an apology, much less redress. Microsoft's own licensing agreements [b]guarantee[/b] absolutely no accountability. Such business practice is something that both Linux and Apple have consistently shown by their behavior that their customers need not worry about with Linux or Apple computers.

            You obviously have such a great stake in Microsoft that you are driven to great lengths to harass people showing documented evidence that Microsoft is not a reputable company with which to do business. You offer no content, no sources, and no basis for your contrived strawmen and red herrings aimed solely at deflecting any substantiated criticism of Microsoft from the ZDNet preview window.

            It is immaterial whether your stake is a financial one or just some emotional fetish. You have made your bed completely indifferent to the welfare of the real people upon whom Microsoft treads in their goosestep march for profits.
      • Looks like MS WANTS it to be in the dark...

        So far for easy access to the OEM and Refurbished FAQ... You need to create an account first to be able to view it. I don't WANT to create a MS-account... And no one should be forced. Never. Finito. But maybe there are better links available. But if even you couldn't find it... Then how about the millions of random people who want to install Windows themselves?
        • No, if you want to be an OEM

          ...you have to register as an OEM. It doesn't cost anything, you don't have to give up personal information, you can use your choice and you get some significant benefits for it. OEM copies are not "for millions of random people who want to install Windows for themselves." If you want to be an OEM, be an OEM. If you want to be a random person, buy a retail copy.
          Ed Bott
  • Why not just X, Y and Z?

    Let's assume Windows 7 Home, 7 Premium, 7 Ultimate and 7 business. To me that's too many, then you add in all the other loopholes and subcategories and ...

    Why not just Windows 7 Home sold by Dell == Windows 7 Home sold by NewEgg == Windows 7 Home sold as shrink wrap. All have the same rules, virtualization options, re-install rules ...

    I am talking about the software being identical. MS can still price it much cheaper for OEMs with their marketing incentives.

    In the end, the confusion about what can and can't be installed when and where, with whatever upgrades to an existing PC just leads to ill will and resentment by those who get caught. They might not be savvy enough to realize that Windows 7 Premium (with small print OEM version) locks it to the exact PC forever.

    Toss in the enterprise SKU and abundance of rules, it makes you wonder if MS actually understands all the ins and outs of how they charge for what is, really, a single OS with some somewhat arbitrary function elimination. (Example, does all Aero really need to be crippled in Home if the hardware supports it?)

    • Kind of

      one of the reasons MS can cut Dell ( or large OEMs) such a price cut is the OS is tied to the hardware. It lives and dies there, so obsolescence (and the next sale of course) is built into the hardware.
      So Dell == shrink wrap doesn't really work.

      I think a 2 tiered, 'tied to hardware' and 'free to uninstall and reinstall anywhere' is enough however.
      At least for home users. ( and lets get rid of home/premium. It is just stupid. Premium is the home baseline).
    • Does Microsoft Understand Licensing?

      Individuals in technical support roles at Microsoft PRIDE THEMSELVES about NOT understanding licensing.
  • Another party....

    [i]OEM System Builder software is not intended for this use, unless the PC that is assembled [b]is being resold to another party.[/b][/i]

    That's when you write out a receipt selling it to a family member for $1 and they give you the PC as a gift. Then the two of you split a six pack and call it "yet another party" (albeit a small one). :-)
  • RE: OEM licensing confusion starts at Microsoft.com

    This really falls into the category of a "support issue". OEM software is not "supported" by Microsoft, but is supported by the OEM (yes retail product does have varying support from Microsoft). If you want to be your own OEM and provide your own support, go for it...

    NOTE: OEM software lives and dies on the PC it is originally installed on (via the processor/motherboard ID's). Hobbiests may want to upgrade their processors or motherboards at some date, and only Retail software (Packaged Product, and Open/Select/EA licensing) suports re-installing on another PC if un-installed from the previous PC.

    Desktop Operating systems, unless retail packaged product, are always OEM. There are no "License" full product desktop operating systems, only upgrades in licensing (i.e. Open/Select or EA licensing).
    • No, it's a licensing issue

      I know you're trying to be helpful, but you're confusing two separate things. Support requirements have always been a differentiator between OEM and retail versions. That hasn't changed one bit inthe last three years. This is a completely separate issue.
      Ed Bott
    • horse pucky

      So you say you can't change your motherboard in your OEM licenced version of Windows? Horse pucky. I've done hundreds of motherboard replacements on OEM licenced computers and every time after I reinstalled windows it activated without issue. It's complete drivel to suggest that the operating system your computer came with is no longer legal because your motherboard died.
      • Your IP Has Been Tracked - Thief

        Probably not, but Microsoft spies are everywhere, right? The tin hat crowd would tell us that your PC phoned home as you typed those words ...

        If you installed the same motherboard model or it's replacement, then what you did is OK. What is not allowed by OEM license is a motherboard and CPU change to a different technology level. IE, going from PIII to P4, or Intel to AMD. The latter are forbidden by license.