Microsoft Senior Sales Excellence Manager - Eric Ligman

Eric Ligman, Microsoft Senior Sales Excellence Manager, Blog

OEM Microsoft software clarifications, plus, “If it’s labeled OEM, you should stay away from that,” Neil MacBride of the BSA (Business Software Alliance) about buying software online.

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OEM Microsoft software clarifications, plus, “If it’s labeled OEM, you should stay away from that,” Neil MacBride of the BSA (Business Software Alliance) about buying software online.

  • Comments 11

Based on some questions I’ve seen recently about buying OEM software and qualifications of doing so, I wanted to provide the following information to help address these.

Have you seen the latest VIDEO from the BSA regarding software piracy, the risks for customers, and the penalties for pirates?  In it, some of the key items they state to watch out for: low price and software labeled as OEM.  When buying OEM software as a system builder, Microsoft provides a list of Authorized Distributors for you to use to ensure you receive legitimate Microsoft software.  If you are not a System Builder, the only legitimate way to purchase OEM Microsoft software is with a fully-assembled computer system.

The Microsoft OEM Team has posted a web page that lays out the OEM licensing policies that were changed back in 2005 and highlighted on our Blog in the following 2 posts:

1)     OEM Microsoft Office Licensing Changes You Need To Know About!

2)     OEM Microsoft Windows (including XP Pro and XP Home) Licensing Changes You Need To Know About!

Here are some of the items you will find on the OEM web page listed above:

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.

OEM Windows Software: If the pack is opened, the enclosed individual software license(s):

·         must be distributed with a fully assembled computer system and

·         must be preinstalled.

The individual software license(s) inside the pack can no longer be distributed with a non-peripheral computer hardware component.

With the new 1-pack, the unopened package can be distributed to another system builder by itself, without any hardware requirement.

OEM Office Software: If the pack is opened, the enclosed individual software license(s):

·         must be distributed with a fully assembled computer system and

·         must now be preinstalled.

Plus, if you read the current OEM System Builder Agreement, you will see it states:

4. SOFTWARE DISTRIBUTION.

4.1 We grant you a nonexclusive right to distribute an individual software license only with a fully assembled computer system. A “fully assembled computer system” means a computer system consisting of at least a central processing unit, a motherboard, a hard drive, a power supply, and a case.

And

6. PREINSTALLATION REQUIREMENT. When you distribute an individual software license for a desktop operating system or application software, you must preinstall it on the fully assembled computer system’s hard drive using the OEM Preinstallation Kit (“OPK”) provided in this package or otherwise made available by us.

So remember, purchase OEM software from an authorized Distributor to ensure you are receiving legitimate software, it can only be sold with a fully assembled computer system (NOT with a memory stick, hard drive, or other hardware component), and must be preinstalled on a fully assembled computer system.  The only time OEM software can be sold without being preinstalled on a fully assembled computer system is when it is being sold unopened, to another system builder.

Know someone running illegal Microsoft software?  The BSA is currently offering a reward of up to $200,000 for qualifying reports of illegal software.  Not familiar with the BSA, you can check out:

1)     BSA home page

2)     BSA audits online video

Thank you and have a wonderful day,

Eric Ligman
Microsoft US Senior Manager
Small Business Community Engagement
This posting is provided "AS IS" with no warranties, and confers no rights

  • well, i am an ms system builder and i only buy from authorized distributors.

    but one thing i'm not going to do is be your police force. you're treating us like pirates with your offerings in the action pack subscription, so go find the pirates yourself.

    ms software is overpriced, especially to system builders.

    if i wanted a copy of xp home upgrade, for example, distribution price was $93. the retail is $99. should be about $50 for an upgrade. who's making money, it's not us. i tell people to go buy it on the internet, it's cheaper than i can buy it for, let alone sell it. if your software was more reasonably priced, you'd probably see less pirated software.

    that's my opinion.

  • I recently received a phone call alerting me that Microsoft would be increasing the price of the Action Pack and that I should renew now for the $299 price.  

    A couple years ago the renewal price was for $199.  Then we received full versions of the software in different bundle packages and OEM system builder copies.  The action pack continues to deliver less for an increasing cost.  This year I happen to be subscribed to a different Microsoft licensing package which covers me just fine.  I don't think continuing this subscription would be wise.  Until Microsoft stops trying to "trap" customers into these more restrictive licensing agreements with threats of BSA and loss of downgrade rights, I will recommend that my customers move to either full initial purchases or more affordable options outside of Microsoft.  My business has been primarily Microsoft for 15 years up to this point.

  • @ Mike H:

    Mike - The Action Pack is NOT a customer licensing program, it is a Microsoft Partner offering only.  Any customer you sold Action Pack to would be running unlicensed software since they do not qualify for the program, so I really hope I am misreading your post above about your customers and Action Pack.  As for your statement of, "I will recommend that my customers move to either full initial purchases," you should ALREADY be doing that.  If you are advising them to purchase Action Pack, you are providing very bad advice to your clients and putting them at serious risk of running unlicensed software.

    Next, I'm not sure what "different Microsoft licensing package" you are referring to above; however, I don't believe Microsoft has another Partner offering that provides more for less, so just make sure what you acquired is legitimate software from an authorized supplier.  There are many out there selling counterfeit or illegal software claiming it is legitimate.

    Finally, Action Pack is an optional program for our Microsoft Partners and each Partner has the right to choose to subscribe or not.  If Action Pack is a fit for your organization as a Microsoft Partner, great.  If you decide it is not the right fit, then you have every right to not renew your subscription.  Just remember that once your subscription expires, you must uninstall all of the software you received and destroy all of the media as well.

    - Eric

  • Never said or meant having customers purchasing the action pack.  My first use of customers meant Microsoft customers - the partners.  My second use referred to my customers purchasing subscription services.

    My point is that subscription services (like the Action Pack, Enterprise Subscription Agreement, OneCare, etc) are dangerous because at the end of the period the subscription provider can change the nature of the game drastically.  As seen with the Action Pack.

    Receiving a phone call saying I have to renew ahead of time - today - as a price increase is imminent is bad business.

    I will remove my action pack installs over the next month and switch over to new (off the partner program) licensing.  I can't take the risk that Action Pack changes will leave me in worse position competitively next year when renewal time comes around again.

  • If a user obtained several  pc's with XP pre loaded on it and now finds themselves failing the genuine advantage test, can they retrospectively purchase OEM XP for those pc's and then change the licence keys? OEM XP is cheaper than purchasing the kit that is offered when you fail the online test.

    I'm not going to go into the "report the reseller" to bsa as that is not my call and anyway, that still doesn't resolve the issue of needing genuine xp licences.

    They were looking at going down the OEM route as it's not possible to purchase open licences for XP anymore. Any help or even contact numbers within Microsoft to speak to someone who knows what they are talking about would be useful!

  • @ Gay

    We are looking to find the software pirates.  We publish quarterly updates on some of the ones we are prosecuting as well for anyone interested: http://www.microsoft.com/piracy/partners/alerts.mspx

    As for, "i tell people to go buy it on the internet, it's cheaper than i can buy it for, let alone sell it. if your software was more reasonably priced, you'd probably see less pirated software," the whole point about Neil MacBride's artilce is that when purchasing online (be it search engines, auction sites, etc.), people are often sold illegal and counterfeit software, not legitimate software.  Are you surprised that someone selling counterfeit software is undercutting the price substantially?  By telling your clients to just go buy off the internet, they are being placed into the position to quite possibly acquire this illegal or counterfeit products by buying what they think is a "great deal."

    You made a commet about your perception of MS software being overpriced for system builders and then stated costs on an upgrade for Windows.  There are no OEM Windows upgrades, just full licenses, so the example you gave has nothing at all to do with System Builder pricing.

  • @ Andy

    System Builder software cannot be used for legalization:

    The Get Genuine Kit is the proper channel legalization solution for existing PCs, NOT OEM System Builder Software.

    For details please visit http//:oem.microsoft/getgenuine.

  • Eric,

    Some times you have to come out of your Microsoft Shell and realize that you're in a completely undefensible position.  Let's forget about the pirates for a moment... because mixing piracy with legitimate OEM issues takes the focus off of what's being said here.

    As long as Microsoft continues to sell OEM Software packaged in singles which are sold through legitimate RETAILERS (Amazon, NewEgg, etc), there are going to be problems with Microsoft's credibility about truly "enforcing" OEM license programs.

    Why don't you just rename these licenses to "NON-SUPPORTED" instead of OEM.  That would make it much clearer to the purchaser what the true difference is and then you can stop pretending that there isn't a problem.  Because this "NEW" licensing has only made things better for the large retailers who now don't need to include a "non-peripheral" device with the software.  As you've stated above, "With the new 1-pack, the unopened package can be distributed to another system builder by itself, without any hardware requirement."

    Now, if you can demonstrate that there is some kind of System Builder ID Number that must be provided when buying a single package OEM license and that these sales are truly monitored to enforce the rules, Microsoft will again be able to gain some credibility.  But we know that there are no such requirements and that ANYONE can be a system builder even if they are only going to build a single system for themselves.

    Now I'm sure there are thousands if not millions of people who build their own computers and would therefore qualify for OEM software.  And I certainly don't think that Microsoft or any company should turn away that kind of business, especially because they are some of Microsoft's most loyal fans. And I do realize how difficult it would be to start calling these licenses "UNSUPPORTED".

    But c'mon, we're not idiots and neither are our customers.  In your article above, you stated, "If you are not a System Builder, the only legitimate way to purchase OEM Microsoft software is with a fully-assembled computer system".  But the reason that ANYONE can be a system builder is actually provided in Microsoft's Form 10-K (Annual SEC Financial Report) for last year which sates that "the OEM channel accounts for over 80% of total Client revenue". (or roughly $9,000,000,000.00 in revenue last year).

  • As you know, Microsoft Office 2007 launched for Business customers through Volume Licensing in November

  • Yes, you read all of those 0's right.  On October 1st, the Business Software Alliance (BSA) announced

  • Yes, you read all of those 0's right.  On October 1st, the Business Software Alliance (BSA

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