To me, this is important enough to post in its entirety.
While I can not find an "official" link from Microsoft-
PCMag is a reputable source. http://www.pcmag.com/article2/0,1759,2087792,00.asp
By Mark Hachman
A Microsoft representative confirmed that users may buy an OEM copy of Windows Vista at a
substantial discount, provided they adhere to the terms of the license - which, incidentally,
may mean providing support for family members.
In addition, users should still be subject to the same familiar re-activation restrictions as
users of a retail Vista license and Windows XP, a spokeswoman said. Users can alter the PC's
hardware substantially, but they will be forced to reactivate - not repurchase the OEM
software - if they do, she said.
One system builder pointed out, however, that Microsoft's OEM license forbids the software from
being transferred to a whole new machine, from scratch, once it is installed on the original
OEM copies of Vista began showing up this week at e-tailers like Newegg.com, for substantial
discounts, which can run up to half off the price of a standalone retail copy of Microsoft's
Windows Vista operating system. Microsoft is also offering its own in-house discounts, in the
form of a Vista Family Pack, which allows the purchase of up to two copies of Vista Home
Premium for $49.99, provided that a customer buy Windows Vista Ultimate at full price, through
For those who don't need a full manual, however, the Windows Vista OEM versions offer
substantial savings. Normally, such versions are restricted to "System Builders," not large
corporations purchasing thousands or even hundreds of copies of the operating systems through
Microsoft's volume licensing programs, but small mom-and-pop computer shops building individual
systems for local communities. The license is agreed to when the shrink-wrap the package is
sealed into is broken.
"System Builder software is designed for OEM system builders, and specifically for
pre-installation on new PCs," said Elissa Brown, a Microsoft spokeswoman, via an email. "So,
this software isn't really intended to be installed by end-users. OEM versions of Windows Vista
that are delivered through the System Builder channel are licensed via a 'break-the-seal' model
(in other words, the System Builder License on the outside of the software package is
agreed-upon when the package is opened)."
Although retailers like Newegg have typically been prohibited from providing the software
without accompanying hardware, Brown said this wasn't true. Readers of PC Magazine and dl.tv
report that Newegg has continued its practice of bundling a token hardware component - drive
cables, case screws or other knickknacks - as a way to offload any legal obligation.
"As long as Newegg is distributing the System Builder version of Windows Vista in an unopened
package with the System Builder License adhered to the outside of the package, Newegg is not
responsible for offering end user support," Brown said. "The party who opens the package (thus
accepting the System Builder License) is required to offer end user support."
More specifically, "the system builder must place its support phone number in a noticeable
location in the fully assembled computer system help files or end-user documentation,"
according to the terms of a publicly posted System Builder license posted to Microsoft's Web
site. That version of the license does not specifically mention Windows Vista, however.
The OEM version of the Vista versions lacks a manual, but includes a "Quick Start" installation
guide, Brown said. The Vista OEM versions will allow a user either to do a fresh installation,
or to upgrade their previous Windows XP installation, she said.
As for activation, Brown said users could expect a return to the familiar activation scenario.
Windows Vista, like XP, contains an electronic list of the components within the PC, which it
turns into a code, or hash. If a user adds or subtracts too many components, the hash will
change enough that it will signal the need for another activation, which can be done either
online or via telephone.
Vista, however, will apparently be a bit more tolerant of the DIY community: "Windows Vista is
more intelligent and a bit more lenient than Windows XP around hardware tolerance," Brown said.
She referred questions to Microsoft's Windows Activation Web page, which does not address
In Windows XP, the software looked at ten hardware attributes to create the hash: the display
adapter, the SCSI adapter, the IDE adapter, the network adapter and its MAC address, a "RAM
amount range" (0-64 Mbytes, 64-128 Mbytes, etc.), the processor type, the processor serial
number, the hard drive device, the hard drive volume serial number and the
"Specifically, product activation determines tolerance through a voting mechanism," the XP
Activation FAQ says. "There are 10 hardware characteristics used in creating the hardware hash.
Each characteristic is worth one vote, except the network card which is worth three votes. When
thinking of tolerance, it's easiest to think about what has not changed instead of what has
changed. When the current hardware hash is compared to the original hardware hash, there must
be 7 or more matching points for the two hardware hashes to be considered in tolerance."
One reader, who identified himself as a system builder in an email, said he felt that receiving
an activation code was not the same as adhering to the terms of the OEM license.
"Even though you can phone an activation rep overseas to activate the software you're violating
the EULA and committing piracy," said the builder, who posted a similar note in the discussion
forums attached to this story.
"It's important that people understand the OEM EULA when it says that your OEM Vista (XP is the
same) can not be transferred to a new computer, and a new (upgraded) motherboard is also
considered a new computer," the system builder added. "I've activated hundreds of PCs over the
years and have never had an activation rep ask if I am transferring the OEM software to a new
PC. The only question that you must answer correctly (no) in order to receive the activation
code is: "Is this version of Windows on more than one PC?". Therefore the end user assumes that
since they received an activation code they must be legal." Editor's Note: This story was
updated at 9:20 AM EDT on Jan. 29 with comments from a reader. http://discuss.pcmag.com/forums/1004.../ShowPost.aspx
Q. Can my customers transfer or sell their OEM software licenses?
A. After an OEM software license has been installed on a PC, the license may not be installed
on or transferred to another PC. However, the entire PC may be transferred to another end user
along with the software license rights. When transferring the PC to the new end user the
software media, manuals (if applicable) and certificate of authenticity label must be included.
It is also advisable to include the original purchase invoice or receipt. The original end user
cannot keep any copies of the software.
The end user license agreement (EULA) is granted to the end user by the System Builder and
relates to the license on the PC with which it was originally distributed. Because the System
Builder is required to support the license on that original PC, a System Builder can not
support a license that has been moved from a PC they manufactured to one that they did not.
This is one of the key reasons why an OEM System Builder license can't be transferred. For more
information, click here.
Q. My customer bought a new PC and wants to move their OEM software from the old PC to the new
one. Can't they do whatever they want with the software?
A. The OEM software is licensed with the computer system on which it was originally installed
and is tied to that original machine. OEM licenses are single-use licenses that cannot be
installed on more than one computer system even if the original machine is no longer in use.
The end user license agreement (EULA) accepted by the customer before they use the software,
states that the license may not be shared, transferred to or used concurrently on different
computers. The System Builder is required to provide end-user support for the Windows license.
A System Builder can not support a license that has been moved from a PC they manufactured to
one that they did not - this is a fundamental reason why OEM System Builder licenses can't be