What Microsoft won't tell you about Windows 7 licensing

What Microsoft won't tell you about Windows 7 licensing

Summary: If you're not a lawyer, the subject of Windows licensing can be overwhelmingly confusing. Over many years of studying this stuff, I have learned that Microsoft has buried much of this information in long, dry license agreements and on sites that are available only to partners. Microsoft hasn't assembled this information in one convenient place, so I decided to do the job myself, gathering details from public and private sources.


<-- See introduction and full table on previous page

Windows 7 OEM versions

According to Microsoft, roughly 90% of all copies of Windows are purchased with new PCs, preinstalled by Original Equipment Manufacturers that build the PC and sell Windows as part of the package. That will certainly be true with Windows 7.

OEM (major PC manufacturer) This is, by far, the cheapest way to purchase Windows 7. The top 20 or so PC makers (sometimes called "royalty OEMs") collectively sell millions of PCs per month with Windows already installed on them. When you start up that PC for the first time, you accept two license agreements, one with the manufacturer and one with Microsoft. Here's what you need to know about this type of license agreement:


  • Your Windows license agreement is between you and the PC maker, not between you and Microsoft.
  • The OEM uses special imaging tools to install Windows on PCs they manufacture. When you first turn on the PC, you accept a license agreement with the OEM and with Microsoft.
  • The PC maker is required to provide support for Windows. Except for security issues, Microsoft will not provide free support for any issues you have with Windows purchased from an OEM.
  • Your copy of Windows is locked to the PC on which you purchased it. You cannot transfer that license to another PC.
  • You can upgrade any components or peripherals on your PC and keep your license intact. You can replace the motherboard with an identical model or an equivalent model from the OEM if it fails. However, if you personally replace or upgrade the motherboard, your OEM Windows license is null and void.
  • Windows activation is typically not required when Windows is preinstalled by a royalty OEM. Instead, these copies are pre-activated at the factory. Your copy of Windows will be automatically reactivated if you reinstall it using the media or recovery partition from the PC maker, it will not require activation.
  • At the time you purchase an OEM copy of Windows 7 to be preinstalled on a new PC, you must choose either 32-bit or 64-bit Windows. Your agreement with the OEM determines whether you can switch to a different version; some PC makers support only a single version with specific PC models and will not allow you to switch from 32-bit to 64-bit (or vice versa) after purchase.

OEM (System Builder) If you buy a new computer from a local PC builder (sometimes called a "white box" PC), you can get an OEM edition of Windows preinstalled. This type of OEM license differs in a few crucial details from the version the big PC makers sell:


  • As with the royalty OEM versions, your copy of Windows is locked to the PC on which it is installed and cannot be transferred to a PC, nor can the motherboard be upgraded.
  • Under the terms of its agreement with Microsoft, the OEM must use the Windows OEM Preinstallation Kit (OPK) to install Windows. When you first turn on the PC, you accept a license agreement with the OEM and with Microsoft. The OEM is required to provide support for your copy of Windows.
  • Activation of your new PC is required within 30 days. The product key should already have been entered as part of the OPK installation and activation should be automatic and transparent to you.
  • Although it is possible for an individual to buy a System Builder copy of Windows 7 and install it on a new PC, that scenario is specifically prohibited by the license agreement, which requires that the software be installed using the OPK and then resold to a non-related third party. (As I noted in a September 2008 post, Microsoft once allowed "hobbyists" to use OEM System Builder software to build their own PCs, but the company switched to a hard-line stance on this issue sometime after Vista shipped in early 2007.)
  • When you purchase a white-box PC from a system builder, the PC maker preinstalls the Windows version you purchased. The package you receive includes reinstallation media and a product key that is similar to a full packaged product but cannot be used for an in-place upgrade. You may or may not receive both 32-bit and 64-bit media. If you receive both types of media, you can switch from 32-bit to 64-bit Windows or vice versa by performing a custom reinstall using your product key.

[Update: As a consumer, you can buy an OEM System Builder copy of Windows from countless online shopping outlets. Technically, you're not supposed to use those copies unless you're building a PC for resal to a third party. But Microsoft's own employees and retail partners, and even its own "decision engine," Bing, aren't so clear on the rules. For a detailed discussion, see Is it OK to use OEM Windows on your own PC? Even Microsoft's not sure.]

All clear? Now let's move on to the next category: upgrades.

Next page: All about upgrades -->


Topics: Microsoft, Hardware, Legal, Operating Systems, Software, Windows

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  • Wow. Thanks.

    This really clears up Windows licensing for me. I had been wondering about this and everything I could find seemed to be convoluted or written in legalese. Thanks again.
    • why is this so hard?

      This is the single biggest reason to move away from Windows. This should not be this complex or need explaining. It should be immediately obvious to me a consumer or consultant what is required to be legal, I should not have to research this issue, nor wonder if I'm in compliance. Simplicity.. It should not be this much work to know what is required. When a 4 page article is the "amazingly easy" solution to understanding licensing you have a problem. Why make it this hard to buy your products?
      • Ridiculous Comment

        We are all laughing!

        Oh, you didn't mean to be funny?

        All DRM license agreements are this complex (even downloaded music) -- they just are ignored. Microsoft is serious about their product rights so people HAVE to take note.
        • olny a fool

          "only a fool makes things more complicated"

          -Albert Einstein
        • Observe: the ideal licensing representation

          I'm going to show you two pages: one that shows the
          license terms, then one that shows the End User
          License Agree. I'm not so much asking you to read the
          license, but pay attention to it's presentation.

          First page:

          Second page:

          So... so why can't all firms do something like that?
  • thanks . . .


    Sadly, the retail still seems to be a pretty stiff price.
  • RE: What Microsoft won't tell you about Windows 7 licensing

    So, if I have a Mac with retail Vista Ultimate installed
    via BootCamp can I get the upgrade version of 7? Not
    entirely clear about that.
    • Yes

      If you already have a legal copy of Vista installed on any computer (PC, Mac, virtual machine), then you can upgrade it to Windows 7.
      Ed Bott
      • As long as one installs over the top of it and doesn't try to do adual-boot


        (More reasons not to support MS anymore - one can't even do a clean install with an upgrade license without doing a lot of shouldn't-be-necessary steps. And with Microsoft freely promoting piracy in other countries, why should anyone take their anti-piracy measures even remotely seriously, especially in the real world where one BIOS upgrade or video driver upgrade triggers the activation process, like we are a bunch of criminals or something... http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/ (bottom of first page merrily reveals all:

        "Gates argued at the time that while it was terrible that people in China pirated so much software, if they were going to pirate anybody's software he'd certainly prefer it be Microsoft's.

        Today Gates openly concedes that tolerating piracy turned out to be Microsoft's best long-term strategy. That's why Windows is used on an estimated 90% of China's 120 million PCs. "It's easier for our software to compete with Linux when there's piracy than when there's not," Gates says. "Are you kidding? You can get the real thing, and you get the same price." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students."
        ) )

        Even $3 for them and $300 for us. How nice; that free market principle really being the latest "trickle-down" swindle...
        • Oh blah blah blah

          Microsoft sells a $29 copy of Windows to American students. But you are muchmore interested in FUD than facts.
          Ed Bott
          • Well, Ed, that's rude

            MS's predatory tactics are well known; facts are not FUD.
          • Ed is not interested in facts. He just shills for Microsoft. He's ignorant!

            No More Microsoft Software Ever!
          • $29?

            My bookstore sells Windows for around $100, depending on the version.
            Where can I get the $29 set?
          • For students

            Ed Bott
          • A lot of of college students are not eligible...

            You must have an Email address ending in ".edu" to qualify. A great many of colleges don't issue email addresses in the college domain. Mine doesn't.
          • A .edu address is not required

            That is the easiest way to get this offer fulfilled, but there is a specific set of procedures for qualifying if you university does not provide you wath an e-mail adress:

            Ed Bott
          • for students

            there is much better deal for windows 7 professional for $29.00 which I found at Microsoft's Ultimate steal.


            get their development software for free at

          • That's the exact same offer

            Just a different entry point and defaults to Professional instead of Home Premium.
            Ed Bott
          • FAke?

            I hate to say this, but this site looks like a fake. Or am I just too
          • Not a fake

            If you start at the link I provided, you will see that it all sponsored by Microsoft and run by third parties they contracted.
            Ed Bott