How-To Geek
Microsoft is Misleading Consumers With Windows 8.1 System Builder Licensing

If you’ve purchased a “System Builder” OEM copy of Windows 8.1 from Amazon, Newegg, or another online retailer, you’re probably violating the Windows license agreement. That means you technically have a “non-genuine” copy of Windows.
Microsoft is misleading consumers here. This was a problem in the past, so Microsoft fixed the licensing problem in Windows 8. But — surprise! — they’re back to their usual tricks with Windows 8.1.
Editor’s Note: We contacted Microsoft Public Relations for clarification of the licensing issues here, but they didn’t respond. Considering the Windows 10 announcement happening tomorrow, we have to assume they will be making licensing changes in the future. But this licensing issue matters right now to anybody building a computer, so keep reading for all the details.
OEM Licenses Were Okay Up Until Windows 7, But Then…
If you ever purchased a copy of Windows 7 online, you probably purchased the “OEM” or “System Builder” edition, which was significantly cheaper than the standard retail copy. It showed up at the top of Amazon and Newegg when you searched for Windows. The popularity stats showed most people bought System Builder copies.
But you actually weren’t allowed to purchase the System Builder copy! The fine print in the license said that you couldn’t use it for your own personal use. Instead, the OEM System Builder copy was only for people who would build computers and then sell them.
Prior to Windows 7, purchasing an OEM System Builder license for your own PC was perfectly fine. In fact, there are legitimate drawbacks to this cheaper license — no support direct from Microsoft and the copy of Windows being tied to a single PC, for example.
With Windows 7, Microsoft changed the popular System Builder/OEM license of Windows. Normal people were no longer allowed to use it to build their own PCs, but Microsoft continued selling them like hotcakes to those same people. This problem was chronicled excellently by Ed Bott over at ZDNet in 2009. Read “Is it OK to use OEM Windows on your own PC? Don’t ask Microsoft” for more background.
Just look at the screenshot below — the Windows 7 Home Premium System Builder edition, which is “intended for pre-installation on a new PC for resale,” is the #1 best selling operating system product on Amazon.com. Microsoft knows exactly how it got to that #1 position — because normal computer users bought it.

Windows 8 Had a “Personal Use License”
Sure, Windows 8 had its problems. But Microsoft did licensing right with Windows 8 — they saw that the Windows 7 OEM System Builder licensing situation was crazy. To fix it, they added a “Personal Use License” allowance to the Windows 8 System Builder license. This means that you could purchase a Windows 8 System Builder license and install it on a new PC you were building. This was good, because people were doing this anyway. Really, they were just undoing a ridiculous licensing change they made for Windows 7.
As Microsoft’s Windows 8 licensing guide puts it:
“With the Personal Use License, end users can buy an OEM System Builder License and use it on a machine they self-build, or as an operating system installed on its own partition in a dual-boot configuration, or in a virtual machine.”
Windows 8’s license changes were widely reported on at the time. And, for a time, everything was fixed.
Windows 8.1 Changed Everything Back
Windows 8.1 is considered a completely new operating system, and it has a new license agreement. The personal use allowance was removed from the Windows 8.1 System Builder license. You may have purchased a System Builder copy of Windows 8.1 after hearing this problem was solved in Windows 8, but sorry! You’re using a non-genuine copy of Windows in Microsoft’s eyes. This is spelled out very clearly on Microsoft’s “Windows system builder licensing for personal use” page:
“If you are building a system for your personal use or installing an additional operating system in a virtual machine, you will need to purchase Windows 8 software or a Microsoft retail version of Windows 8.1 software. Windows 7 and Windows 8.1 system builder software does not permit personal use, and is intended only for preinstallation on customer systems that will be sold to end users.”

At the time, Microsoft announced they’d be removing System Builder copies of Windows from typical consumer retail channels — computer stores and online retailers like Amazon and Newegg. In fact, press reported that Microsoft was killing the “System Builder” copies of Windows so everyone could just buy the standard retail copies. In September 2013, TechCrunch reported that:
“Microsoft is shifting gravity away from System Builder builds except for OEM partners and others that buy its operating system in bulk from distribution partners.”
However, it’s now more than a year later and you can still find System Builder copies of Windows 8.1 near the top of Amazon and Newegg when you go to buy a copy of the latest version of Windows for your new PC. People are clearly buying these. In fact, the System Builder copy of Windows 8.1 Pro is $46 cheaper than the standard retail copy of Windows 8.1 Pro on Amazon.com right now. People are clearly buying these system builder licenses for personal use. The licensing information on sites like Amazon and Newegg doesn’t clearly say “YOU ARE NOT ALLOWED TO BUY THIS FOR YOUR OWN PC” — that’s what it should say if Microsoft is serious about enforcing their license agreement.

When you search for Windows 8.1, Amazon displays the message “If you’re a system builder, Amazon offers Windows OEM products. Otherwise, shop our Windows 8.1 titles.” But come on — we all know normal people are buying the System Builder editions. This message is also purposely vague — you might think you’re a System Builder because you’re building your own PC. You’re not — at least according to Windows 8.1’s terms, although you were a System Builder under Windows 8’s license. Before that, Windows 7 didn’t consider you a System Builder, while Windows Vista and previous versions of Windows did — according to Microsoft’s website, although the license agreement itself was vague.
Yikes! Who can keep track of this stuff?
Want a Legitimate License? Those Cost Extra
Look, this is a completely absurd situation. If you’re an average PC enthusiast building a PC, you probably purchase a System Builder edition of Windows because it’s cheaper and shows up on top of Amazon and Newegg. If you had any reservations about it, they were probably cleared up when you heard about the licensing change in Windows 8. Microsoft gets money, you get a copy of Windows, and then things go off the rails. Although you bought a legitimate copy of Windows from a legitimate retailer and Microsoft got paid, Microsoft gets to say you’re breaking the Windows licensing agreement.
If you actually read the licensing agreement, you have a choice. You can knowingly violate the license by buying the same copy of Windows most people are buying — one that Microsoft goes back and forth between allowing and disallowing. Or, you can try to “do the right thing” and follow the licensing agreement. Want to do the right thing? That will cost you extra — “doing the right thing” is a premium product.
It’s price segmentation — do you just want a copy of Windows that will work normally? Here you go, $130 for the Professional edition. Do you want to obey the licensing agreement and have a properly licensed copy of Windows Professional? That’ll be $46 extra; thanks for your business.
Of course, Microsoft isn’t actually enforcing this, not as far as we know. But they do perform software licensing audits on businesses. If you use Windows 8.1 for business, you better spend the extra money on the retail edition, just to be safe — and that’s what they’re counting on.

Hopefully, Microsoft didn’t respond to us because they knew this licensing fiasco is indefensible. They may have already fixed this problem for the next version of Windows. (Or that may be wishful thinking.)
If they haven’t fixed the System Builder license, Microsoft needs to stop playing games. Don’t want people buying the System Builder copy of Windows? Then stop selling them on Amazon and Newegg, or at least put a big “YOU ARE PROBABLY NOT ALLOWED TO BUY THIS” disclaimer up. Want to keep selling cheap System Builder copies of Windows? Then change the license agreement to allow personal use again. Simple!
Image Credit: Robert Scoble on Flickr
Windows is overpriced as it is. If they were to sell windows for $40 Everyone would buy it and no one would have to pirate it
If you buy Windows 8 at any price, you are violating the rules of good sense. Microsoft would be a band of criminals if they gave away Windows 8! How do I know? I have it on four computers, and I made the mistake of getting it on a couple dozen for clients before I realized what a load of crap it is!
MS always has license issues that are in place but they don't really care about when I upgraded to Windows 8 I was already running the preview in a dual boot with the OEM copy of Windows 7 at first I didn't realize that I legally was required to install over Windows 7 and not use it as a term of the agreement of the upgrade by the time I realized I decided to ask about it on MS's forums and the question was ignored and no response were forth coming. I still have Windows 7 on those machines but I can't remember the last time I bothered to boot into it for anything other than running updates occasionally.
I bough a few windows 8 at $40. That seemed a reasonable price.
In the 80-90s I use to read the EULAs in detail. There was a lot of great info in them and they would say things like "if you have this on your computer at work, you can then have a copy on a portable and at home." The IT guys would say "no way - that's a copyright violation!" but no one would really read and understand them.
Now, I don't read the licensing. To do so would be to practice law without a license
. I've concluded that licensing (and copyright) is an adversarial system. Both sides attempt to get away with as much as they can. Who is right or wrong is pretty much only determinable in a court of law on a case by case basis.
I recently helped a customer move from an old laptop to a new laptop. They wanted to move their Microsoft Office over also. They had not kept their activation code. I Googled to see how to recover it. I first got a Microsoft site that said "sorry if you've lost your code, but we can't tell you what it was." I then got a site with a downloadable program that showed me the code. I reinstalled it on their new laptop without an issue. How many people have paid for a new copy of Office (or Windows) because they lost their code but had a contractually/licensed/legal valid use to it? Yes, I understand software pirating, but that is no excuse to try and make money on people's simple mistakes (unless you are in banking or credit cards
.
My philosophy is as long as I paid something (any amount) to a legitimate channel (i.e., the money gets back to the creator in some fashion) then I'm fine. If I have to use tools to make my purchase work as I wish for my own personal needs (or a customer's personal needs for something they've purchased) then I don't worry about it.
I loved the comment from Bill Gates about rampant copying in China. It went something like "we wish they would pay for our software but if they are going to copy any software we want it to be ours." It is just business. To get wrap up in moral or ethical angst when the other guy isn't concerned about any such thing except for how much money the "words" bring in is a waste of time. I do what I honestly believe is right and reasonable and I expect that will be as good as any $500/hour contract lawyer's advice if I ever have to explain it in a court of law.
MS licensing is a bloody nightmare, so many variations and refinements on rules and who can't/can be allowed to use which or what version of the OS. I gave up my refurbisher accreditation when they screwed around with the rules and frankly I haven't missed it. I recognise that others may find value in it and I hope t continues for you.
You'd almost think MS only wants large corporations building and supplying computers, but I'm sue that couldn't be right could it..?
If you think consumer licensing is a mess, look deeper into Microsoft's Enterprise licensing. Even Microsoft can't figure it out for themselves. You need CAL's for your CAL's- but only if they're on-network. If they're off-network and using corporate services you need X license. It's absolutely rediculous.And no, Linux is not an answer to Enterprise.
EDIT: It appears Microsoft is doing us a solid-
http://www.maximumpc.com/microsoft_exec_windows_9_be_free_windows_8_users000
I remember long ago when I bought some OEM Operating Systems either Windows 95 or before, they came with an old used computer board of some kind because you had to purchase them with computer equipment.
Well, as a system builder myself, I could a buy a SB licence, "sell" the computer to my brother and then he could "donate" it to me![:smile: smile]()
Right!!I remember that. Received a crapped out floppy or something with my OS.Wow! Been a while.
It's perfectly legit to dual-boot Windows 7 and Windows 8 if you purchased 8 on an upgrade license. What you can't do is give your Windows 7 to someone else.
Microsoft 8/8.1 is the best thing that ever happened for Apple computers. As a 20 year MS anti Apple PC user I finally thru in the towel when my PC Windows7 crapped out. I could not buy another PC with the POS Win8 on it. I have Win8 experience with another desktop which was enough of Win8 for me.
When I could put the price of an Apple in the back of my mind, from all perspective is a better laptop than any laptops I've ever had owned.
My long time with MS, they have always taken the profit over customer satisfaction, including the people making PCs with windows OS on them. Since windows didn't make PCs they had no conscience with pricing including OS upgrades windows to existing PCs. I've had over a dozen OS upgrades on my Apple product without a penny.
At the end of the day, Windows has lost me forever.
Do you know that $40/- is more than those large volume buyers like HP, Dell, Lenovo are paying? This is one way of promoting these manufacturers when the end user factors in all the inputs.to decide to either build one or just buy one !
I had very similar problems. I tried installing it from the same media on the same hardware and every time I got different result. I simply gave up !
Until Windows 7 there was no copy protection on any software from MS. All they wanted was everyone to use windows and stay away from Linux or any other alternative. I remember that there was one specific serial number of XP that was widely used for pirated installation. Any installation with that serial number was blocked from subsequent Service Packs. What they did not realise was the fact that one could take this copy of pirated edition, integrate the service pack and then install it without any hassles !
That would be perfectly legal. Better still would be to let your brother buy the license and the components and then let him sell it to you at cost. Keeps your accounting clenn for the IRS.
A few of my clients were facing similar problems. They were in market for new systems. I had them all buy last available full retail copies of Windows 7 Ultimate so that they would be able to transfer it to newer hardware as and when required.
Stuff like this and DRM is what pushed me and a lot of others away from windows to linux
All the DRM in the world doesn't make a difference when your applications and games don't work on a platform.
I dislike Microsoft's BS so much that I was willing to learn linux and also learn linux applications to replace windows applications. I run no specialized software for work. If I want to play games I fire up my XBox, PlayStation or Wii.
You are free to choose what you want to run. But your choice in no way minimizes or invalidates choices other than windows.
And if I wanted to play games on any box I would run a dual or multi-boot, like I do now but for a different reason. In spite of what is shared frequently on here a true dual or multi-boot is not difficult to set up or maintain. My job does not want Libre Office used because of minor differences in formatting. So I have Windows so I can run Office.
So you get to manage two or more operating systems, rather than one. Yay.
All I'm saying is this: I've used Windows since 3.0. I've never had a problem with DRM or Activation on any Microsoft product getting in my way. Sure, I've had to call in to re-activate an OS once or twice, but that's what happens when you run a computer store and do this all day, every day.
And I am greatly amused at how you dislike Microsoft's BS, but own and use an XBox and a PS3. Sony is the company that crippled the PS3 when they took away the "Other OS" feature, and later sued people who tried to bring it back. And the DRM problems with the Wii are the worst; there's no moving your downloaded games between consoles with the Wii. I can play any game I own on any XBox any time I want, but I can only have 2 PS3's registered on my account, and forget about running downloaded games on mutliple Wii's in the house.
You are running the 3 most DRM'd devices in consumer electronics and complaining about the activation process in Windows, which is usually a one time thing, or a small difference in retail vs OEM pricing for the operating system - which is also justifiable, since the OEM's provide technical support for their Windows customers, and MS provides support for retail OS customers.
It's okay if you just want to be different... but the simple fact is that for most people, the way Windows is distributed and activated works just fine. Microsoft had do something to reduce piracy, and the system they built works pretty well.
No Tom, I am not complaining about anything. I simply stated why for my computing needs, NOT MY GAMING NEEDS (which BTW I scarcely play), I use linux. The only reason I have gaming systems is for my daughter. I only started playing games with her. If it was not for her I would not own one. If you want to be a windows fanboy go right ahead. I believe people should use what they want to use. I never tell people they should convert to linux.
As far as maintaining two OSs I have not ever lost any sleep over it, and it has not added any "headaches or hard work". You should know I admire the knowledge you have however your attitude of Mr. Know It All reduces that knowledge to rubble.
For example I stated that I am tired of Microsoft's BS. Actually it is a lot more BS than covered in this thread. I stated that because of that I use Linux. My question to you is "Why does that irk you to the point you need to prove that you know more and I (and others) who use linux know less or are incorrect or overburdening ourselves with a dual or multi-boot system?" "Why do you have the need to prove you are right?" All over a statement as to why I use Linux?? I think my friend you have an issue or two going on. I would suggest you look within.
Except you were.
Compain (verb): express dissatisfaction or annoyance about a state of affairs or an event
Again, my points are valid:
You have admitted you can't avoid Microsoft's software, since office dwellers rely on it. You even mentioned dual-booting, and I posit the question: how is dual booting easier than single-booting to Windows? You still deal with Microsoft's BS and DRM, so you have not gained anything.
You called out DRM as a problem, when the facts don't agree with you, and you happily use other systems with stronger and more onerous DRM. So if you want to call out the "other problems", that's fine...but you can't call out the DRM. You also can't use "it's for my kid" as an excuse. There are plenty of video games that run under Linux. My kid's first video game console was an HTPC.
The amount of angry Microsoft bashing is getting tiresome. Acknowledge the world's dependence one one company's software is not being a fanboy. I think you'll find that I'm plenty happy to call MS out on their mistakes. Throwing petty insults or constantly trying to push people away from said company is what I find annoying.
Look back at every mention of Linux in a thread that starts with Microsoft or Windows in the title. Much of the time, it's someone being insulting or trying to "help" someone who wants Windows by pushing Linux on them. How many threads started out with something like "how do I get Windows 7", and somewhere along the way, someone says "Switch to Linux! You'll be happier!"
I'm not the aggressor here. I merely pointed out that dual-booting to Windows doesn't solve any problems and, in fact, creates new ones. This is antithetical to the stated goal of making life simpler.
That is not complaining. That is a statement of fact from my personal experience.
I never do that. Bringing this up here is an example of how you judge without knowing facts. If I were one who did that I would admit to it.
We can't control what people say or think Tom. If anyone gets out of hand or way off track Scott and Geek take appropriate measures. We all have to learn that an opinion contrary to ours is not an affront to our value as a human being.
Yes you are because you say dual booting solves no problems it is considered gospel.
Bottom line don't take yourself so damn seriously. I have seen you have many arguments with others on here. In my opinion almost without exception your side of the argument springs forth from a need to be right and to project yourself intellectually superior. I say this about your interactions with others on here as a neutral observer. AND I readily admit you have superior knowledge. I just think you leverage that in the wrong way.
I am not bashing Microsoft. I am just saying why I do not like them. If I tell you why I do not golf, is that bashing or complaining? I never try to steer anyone to/away from Microsoft. I also never try to steer anyone to/away from Linux. UNLESS ASKED. However I can state why I do not like Microsoft. In the final analysis it is up to each person what they will use.
I can tell you have little practical experience with linux or dual boot. The reason I say that is you say it is difficult or not simple to maintain. If you actually had the experience and say that then I have to assume you were not capable or did not want to learn linux.
When dual or multi-booting each OS is it's own entity and has nothing to do with the other OSs. The only area where problems can occur is the boot loader. Most of those problems occur from ignorance. I have 3 hard disks multi-booting Windows 7 & 8, Arch and Manjaro. I am about to add Ubuntu again. Never had a problem maintaining each OS it is simple. You can only boot into one at a time. With a little studying and tinkering it is quite easy to master the GRUB boot loader. There are a few others out there as well. Been multi-booting and testing linux distros since 2007 I believe.
Trust me I am not an IT professional, I did not go to school for computers or anything related. I am totally self taught. I moved to Ellicott City, MD in 1997. My nephew had a windows 95 box laying around. I took it with me. I never touched a computer before. I read the windows manual that came with the computer. I booted up and strated tinkering around. When I got stuck I referred to the book. Once I learned enough to not need the book I took the book that explained the hardware and how to replace it. I took that box apart and put it back together. I joined a few forums and have been going ever since.
I am going to end this conversation so we can get back to the topic of System Builder Prices. Your comments have been noted.
I have never heard of Microsoft taking legal action against anyone selling or using system builder SKU's on their personal machines, so I think consumers are safe. Has anyone ever heard of any examples of Microsoft contacting a retailer to ask them to stop selling System Builder copies?
I think this might just be a good excuse to get off with lower technical support costs, since Microsoft pushes support duties to the OEM, rather than providing free support to people who call with problems - if you buy an OEM copy of Windows. People who buy retail versions do get support, so that may be money well spent if you're not the DIY type.
I love when the two of you go off on a tangent -- it's so rare to see such an eloquent discussion, especially when you're both wrong and OS X is better.![:smile: smile]()
Hmm... nothing will ever beat the thrill of using AmigaOS - an operating system pretty much dedicated to multimedia and video production.