Ever tried to buy a Windows license from Amazon or Newegg? If only it was so simple. You’ll encounter cheaper System Builder (OEM) and more expensive Full Version (Retail) licenses. But the difference isn’t immediately apparent.

System Builder licenses are available for both the “core” and Professional editions of Windows. In other words, there are four different consumer versions of Windows to choose from.

Can I Use a System Builder License?

RELATED: Microsoft is Misleading Consumers With Windows 8.1 System Builder Licensing

First, let’s get one thing out of the way. Microsoft’s been all over the map when it comes to whether System Builder licenses can be used by normal computer enthusiasts building their own machines. On Windows XP, Vista, and 8, this was allowed. On Windows 7 and now 8.1, it’s not allowed. But you wouldn’t know it unless you read the fine print. For the purposes of this article, we’re just going to assume that you can actually buy and use a System Builder (or OEM) edition of Windows and use it on your own computer.

Technically, you can do this. The System Builder installation media will install just like a standard retail — or “Full Version” edition — of Windows will.

They’re For Different Audiences

The two types of licenses here differ conceptually. One is for normal Windows users, at least in theory — most Windows users don’t actually buy boxed copies of Windows. Another is for people building computers and preinstalling Windows, or maybe building their own PCs — it seems to go back and forth with each Windows release.

  • Full Version/Retail licenses of Windows are the standard “consumer” version of Windows. If you’ve ever walked into an electronics store and saw a boxed copy of Windows on a shelf, you were looking at a retail license of Windows. These are designed for sale to average computer users who may be buying a new Windows license to upgrade their computer to a new version of Windows. It allows them to take their copy of Windows and install it on any PC they like — but it can only be installed on one PC at a time.
  • System Builder/OEM licenses of Windows are used by computer manufacturers — “Original Equipment Manufacturers.” Not only are they used by large computer manufacturers like Lenovo, Asus, Dell, and HP, they’re used by the local computer shop you might buy a custom-built computer from. Microsoft has swung back and forth on whether “enthusiasts” can use System Builder licenses of Windows when building their own PCs. This type of license is designed to stay tied to a single PC forever.

As you might expect, System Builder copies of Windows are cheaper — but they are more limited.

The System Builder License’s Limitations

Here are the ways a System Builder license is limited:

  • It’s Tied To One Computer/Motherboard: After you install your System Builder copy of Windows, it’s tied to that single computer you install it on forever. Specifically, it’s tied to that model of motherboard. The System Builder license of Windows becomes associated with a single system, while you can take a Retail copy of Windows and then install it on another computer in the future. Of course, it can still only be installed on one computer at a time.
  • No Free Support From Microsoft: You don’t get any free support direct from Microsoft. This means you can’t call a Microsoft phone line and get help with any problems you experience. The System Builder license states that the system builder is responsible for providing support — so, if you buy a computer with a System Builder copy of Windows, the company or person who sold it to you is supposed to provide support. If you build your own computer with a System Builder copy of Windows, you’re responsible for providing your own support. This is only an issue if you want to call Microsoft — you still get updates from Windows Update, of course.
  • Choose 64-bit or 32-bit At Time of Purchase: When you purchase a System Builder edition of Windows, you have to buy either a 32-bit or 64-bit version of the installation media. When you purchase a Full Version, both the 32-bit and 64-bit editions of Windows come on the same DVD. Because the software is designed to only run on one PC, it’s expected you’ll just choose 32-bit or 64-bit at time of purchase. (You probably just want the 64-bit edition of Windows at this point, anyway.)
  • Can’t Be Used to Upgrade: The System Builder copy of Windows can’t be used to upgrade from an older version of Windows — for example, to upgrade from Windows XP to Windows 7 or from Windows 7 to Windows 8.1. That’s because it’s designed for installation on new PCs that don’t yet have any operating system.

So, Which Should You Get?

RELATED: Do You Need the Professional Edition of Windows 8?

Assuming you’re fine with the gray area of licensing, a System Builder copy of Windows makes a lot of sense if you’re a geek building your own PC. If you’re willing to tie that copy of Windows to your hardware and you don’t need to call Microsoft for  support, you can save money.

How much money depends on the deals you find. On Amazon at the moment, the retail version of Windows 8.1 costs $106.53 and the System Builder edition costs $92 — a $14.53 savings. For Windows 8.1 Professional, the retail version costs $175.49 and the System Builder edition costs $129 — a more sizeable $46.49 savings.

Windows 7 isn’t officially available in retail form anymore, although Microsoft is still selling System Builder licenses. This leads to the ridiculous current pricing of $96.89 for the System Builder edition of Windows 7 Home Premium, while the few remaining retail copies of Windows 7 Home Premium are going for $398 each — a $311.11 savings for buying the forbidden System Builder edition!

The System Builder license for the original Windows 8 works differently, but we didn’t cover it here. You won’t often find System Builder licenses for Windows 8 these days — just System Builder licenses for Windows 7 and 8.1. Microsoft fixed the System Builder licensing problem with Windows 8 before reverting back to the old broken system with Windows 8.1.

Image Credit: Alexey Ivanov on Flickr, Martin Abegglen on Flickr, Brian Timmermelster on Flickr

Profile Photo for Chris Hoffman Chris Hoffman
Chris Hoffman is Editor-in-Chief of How-To Geek. He's written about technology for over a decade and was a PCWorld columnist for two years. Chris has written for The New York Times and Reader's Digest, been interviewed as a technology expert on TV stations like Miami's NBC 6, and had his work covered by news outlets like the BBC. Since 2011, Chris has written over 2,000 articles that have been read more than one billion times---and that's just here at How-To Geek.
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