Unlike Windows 7, Windows 8 Professional edition licenses supplied by PC manufacturers (OEMs) do not include the right to install Windows XP Professional instead. If an organization wants to install Windows XP on new computers, it must ask the OEM to ship new computers with Windows 7 (rather than Windows 8) licenses or supplement OEM Windows 8 licenses with OS-related licenses purchased through volume licensing programs. Organizations most likely to be affected are those that have not completed migration to Windows 7 and do not have an Enterprise Agreement (EA) covering the Windows client OS.

Licensing Windows and Downgrades

Windows OEM licenses come with a computer from its manufacturer and are how most organizations initially license PCs, laptops, and other Windows client devices. These OEM licenses come with a specific set of terms and use limitations. (For an overview of major licensing terms, see the chart "Windows 7 and 8 Professional OEM Licenses Compared".)

OEM licenses for Windows XP Professional, Windows Vista Business, and Windows 7 Professional provided "N-2" version downgrade rights, meaning that a customer could substitute either of the preceding two versions in place of the licensed version. This precedent continues, but it means that while Windows 7 Professional OEM licenses permit customers to downgrade to Windows XP Professional, Windows 8 Professional OEM licenses do not. As has always been the case, OEM licenses for the Windows client OS are permanently tied to the PC to which they are initially assigned, so if a new PC replaces an old Windows XP machine, the old Windows XP license may not be applied to the new machine.

To obtain a more favorable and expanded set of use rights than provided by OEM licenses, including downgrade rights, many customers supplement their OEM Windows Professional licenses with purchases made through volume licensing programs, the two most prominent being the Windows Professional Upgrade license and Software Assurance (SA).

The Windows Professional Upgrade (US$187 per device) allows the latest version of Windows Professional to be installed on the PC in place of the existing version. (All prices quoted in this article represent the highest fee a business customer in North America would pay through a volume licensing program.) It also permits downgrades to any prior version of Windows Professional. The Windows Professional Upgrade can be purchased at any point in time for PCs with OEM licenses for Windows XP Professional, Windows Vista Business/Ultimate, and Windows 7 Professional/Ultimate, as well as for Apple Macintosh computers.

Software Assurance (US$55 annually per device) can be added to an OEM Windows Professional license within 90 days of the PC purchase (or bought at the same time a Windows Professional Upgrade license is purchased). This subscription offering provides upgrade rights to successor versions, permission to use Windows Enterprise edition, and other benefits, including the right to downgrade to any prior OS version. SA is typically purchased across the entire organization via an EA, an Open Value company-wide contract, or piecemeal through other Microsoft volume licensing programs.

Options for Dealing with the OEM Downgrade Rights Change

There is still a large installed base of Windows XP, and many corporate customers are still in the process of migrating to Windows 7. Organizations that purchase PCs with Windows 8 Professional licenses and unwittingly deploy Windows XP in its place are at risk of license noncompliance. If audited, they would likely be compelled to purchase Windows Professional Upgrade licenses, which (somewhat ironically) provide the right to downgrade to any previous version of the Windows OS (Professional or Business edition but not Enterprise edition).

Organizations impacted by the version downgrade rights change have the following options, which may be used in combination.

Ask the OEM to ship Windows 7 Professional instead. For at least two years following the release of a new Windows client OS version, OEMs typically have the option to ship PCs with a license to the previous version of Windows; Microsoft has given no indication that it plans to deviate from this precedent. The downside to requesting a Windows 7 Professional license is that customers will have to pay extra if they wish to upgrade to Windows 8 Professional in the future.

Coordinate PC purchases with a Windows XP phase-out strategy. Organizations could avoid the need to downgrade new PCs to Windows XP altogether by postponing new PC purchases until they are ready to move the affected users to a newer OS version. If a PC has an OEM Windows 8 Professional license, any post-Windows XP version (Windows Vista Business, Windows 7 Professional, or Windows 8 Professional) may be deployed.

Add SA to a new Windows 8 Professional license. Adding SA to a Windows 8 Professional OEM license provides, among other benefits, the right to downgrade to any prior OS version, including Windows XP Professional. However, given the cost, this option likely makes sense only if other benefits associated with SA provide additional value to the organization.

Add an Intune subscription to a Windows 8 Professional PC. Intune, which leverages online services hosted in Microsoft data centers to provide PC management and malware protection, includes most of the special use rights and benefits associated with SA for Windows Professional, including the right to downgrade to any earlier OS version. However, at an annual cost of US$132 per PC, Intune is more expensive than SA and thus makes sense only if its system management and protection features have value to the organization.


Windows 7 licensing, including special use rights contingent on SA coverage, is explained in the Apr. 2012 Licensing Outline, "Licensing Windows 7 for PCs."

Past extensions of Windows XP downgrade rights and license availability are discussed in "Windows XP Downgrade Rights Extended" on page 36 of the Aug. 2010 Update and in "Windows XP Leaves Mainstream" on page 12 of the Apr. 2009 Update.

Version downgrade and other use rights associated with the OEM Windows 8 Professional license are documented in the Windows Professional Software License Terms (SLT), sometimes referred to as an End User License Agreement (EULA). Though not available at time of publication of this article, it will be posted at www.microsoft.com/About/Legal/EN/US/IntellectualProperty/UseTerms/Default.aspx.

Rules for adding SA to OEM acquired licenses are documented in the monthly Product List posted at www.microsoft.com/licensing/about-licensing/product-licensing.aspx#tab=2.

Use rights for Windows Professional Upgrades and SA in Microsoft Volume Licensing are outlined in Microsoft's Quarterly Product Use Rights (PUR) document at www.microsoft.com/licensing/about-licensing/product-licensing.aspx. Some SA-specific benefits are discussed in the monthly Product List.