Microsoft changes Vista license terms

Who says Microsoft doesn't listen? Three weeks ago, when the new license terms for Windows Vista were officially release, one change set off an avalanche of feedback from the enthusiast community. Today, Microsoft rewrote that part of the license agreement. Individual users can now transfer a retail license from one PC to another or upgrade an existing computer without fear of being forced to pay again.
Written by Ed Bott, Senior Contributing Editor

There's good news out of Redmond today for anyone planning a Windows Vista upgrade in 2007. Bowing to intense feedback from the enthusiast community, Microsoft has modified the license terms for retail versions of Windows Vista to allow end users to transfer a retail license from one computer to another, or to upgrade an existing computer without fear that they'll be locked out until they purchase a new license.

The new license terms say: “You may uninstall the software and install it on another device for your use. You may not do so to share this license between devices.”

That's a welcome step back from the sneaky change that had been embedded in the previously published license agreement, which restricted users to a one-time reassignment of a retail license. A subsequent attempt to spin this change as a "clarification" of the existing license terms only made the avalanche of negative feedback worse.

In sheer numbers, this change won't affect many people, but those who are affected represent some of the most vocal and enthusiastic members of the Windows community. I spoke with Shanen Boettcher, General Manager of Windows Vista Product Management, who acknowledged having received "lots of e-mail and other feedback" on this issue.

Here are the practical implications of the change:

  • If you purchase a new computer with Windows Vista preinstalled, or if you build your own PC using an OEM version of Windows, this change doesn't affect you. Your copy is locked to that PC and cannot be transferred to another.
  • If you purchase a retail copy of Windows Vista and install it on a PC, you can install that same copy on another PC, provided you remove it from the original PC. In this scenario, you may be unable to activate the new copy over the Internet, but you will be able to activate over the phone.
  • You can perform an unlimited number of upgrades to an existing computer running a retail version of Windows Vista. If those upgrades are significant enough to cause the computer to look like a new PC, you'll be required to reactivate within 30 days.
  • This change should resolve one issue associated with the use of Windows Vista in virtual machines as well. Under the newly worded license, you should be able to move a virtual copy of Windows Vista to a new physical hardware without violating the terms of the license agreement, provided that you remove the virtual machine files from the old hardware.

One detail about the new license-enforcement terms remains a mystery. How does Microsoft determine when an upgraded PC crosses over the threshold and goes beyond the specified "tolerance level"? In Windows XP, the algorithm used by Windows Product Activation was documented in a Technical Market Bulletin published around the same time Windows XP was released to manufacturing. For Windows Vista, Boettcher says, the algorithm has changed significantly. "The algorithm in Windows Vista has gotten a bit more intelligent and lenient," he told me. "Different components are assigned different values, with the hard drive and motherboard being the highest-weighted components."

Earliler this week, Mary Jo Foley published excerpts from a draft document on Volume Activation 2.0 that appears to confirm this change. That section (which refers to "retail activation") is not included in the final version of the document posted on Microsoft's website.

Boettcher argues that the algorithm has changed from its XP predecessor and that it's subject to change in the never-ending battle with software pirates. For Windows Vista customers, he says, the details are irrelevant: If you upgrade an existing PC, you'll be allowed to reactivate under the new license terms, and you'll have 30 days to do so, which is a significant improvement over the three-day grace period allowed when Windows XP goes "out of tolerance."

Update 3:30PM PST - The Windows Vista Team Blog has this mea culpa:

Our intention behind the original terms was genuinely geared toward combating piracy; however, it’s become clear to us that those original terms were perceived as adversely affecting an important group of customers: PC and hardware enthusiasts.  You who comprise the enthusiast market are vital to us for several reasons, not least of all because of the support you’ve provided us throughout the development of Windows Vista.  We respect the time and expense you go to in customizing, building and rebuilding your hardware and we heard you that the previous terms were seen as an impediment to that -- it’s for that reason we’ve made this change.  I hope that this change provides the flexibility you need, and gives you more reason to be excited about the upcoming retail release of our new operating system.

I'll have more to say about the new Windows Vista license terms and some encouraging changes in WGA next week.

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