Desktop PCs that come with Windows XP can now be downgraded to an earlier operating system (OS), reimaged over a network from OEM CD-ROMs, and offered for rent, due to changes in the OEM End User License Agreement (EULA) that took effect with the release of Windows XP. Microsoft says the changes will make it easier for customers who purchase multiple PCs through different channels to achieve a consistent system image throughout their organization without paying financial penalties.

Downgrades, Reimaging Help Companies

Permitting downgrades of OEM licenses will benefit companies that want to remain on an older OS while buying new PCs. In the past, OEM versions of Windows did not permit downgrades. Customers who wanted to keep all their machines on an older OS had to order new PCs with the older OS from the manufacturer (usually at extra expense) or purchase a Windows upgrade license such as Upgrade Advantage, which also includes downgrade privileges. Customers viewed this as paying Microsoft twice for the privilege of using one Windows license on one PC.

Permitting reimaging (installing a single corporate image on multiple PCs through "ghosting" or some other disk imaging system) from OEM media will allow organizations that don't have volume licenses to benefit from the practice. Microsoft already permitted volume licensing customers to use volume licensing CDs to reimage machines purchased with OEM Windows licenses. However, nonvolume licensing customers were not permitted to reimage over a network from OEM media, forcing them to miss out on this time-saving practice.

Finally, the OEM EULA previously prevented PCs with Windows from being leased or rented; that provision has been removed from the OEM license for Windows XP, although it remains in the retail EULA.

Payoffs for OEMs

Kurt Kolb, general manager of the OEM business group, says the change also reduces complexity for OEMs, which have often been forced to offer additional SKUs to satisfy customers who wanted a downgrade OS. OEMs can now offer customers one OS, the latest version, and customers are free to downgrade it themselves.

The change removes one incentive for customers to buy volume license agreements (which offer downgrade privileges), but Microsoft believes that this is not likely to affect the number of customers purchasing volume licenses, which offer deep discounts on pricing and many other benefits.

The new provisions contain a number of caveats. Downgrade rights come only with the Professional Edition of Windows XP and are not available in the Home Edition. Windows XP Professional computers can be downgraded only to specific OSs: Windows 2000, Windows NT 4, or Windows 98 Second Edition. Microsoft does not supply customers with media for these downgraded OSs. Downgrading a PC might invalidate the OEM warranty and support for the PC’s operating system; customers who are likely to seek support from their OEM should check with the OEM first to see what the consequences of downgrading will be.

A description of the Windows XP EULA changes is available in a licensing brief at www.microsoft.com/business/downloads/licensing/OEM_EULA.doc. A description of Microsoft’s current reimaging policy is available in a licensing brief at www.microsoft.com/business/downloads/licensing/reimaging113001.doc.