When it comes to buying hardware, quite often the only difference between a full retail product and an OEM version is a colorful box, a few cables, an instruction manual, and perhaps a software bundle — additions the buyer pays extra for. When buying OEM hardware, the rules are pretty simple. It is assumed that the buyer is familiar with the product being purchased and is responsible for installation, configuration, and support of the end product (i.e. a fully assembled computer system) that the OEM hardware may be included in. Those who purchase OEM products shouldn’t expect much support from the vendor or the manufacturer of the hardware. Warranties on OEM products vary, but are often limited to one year from the date of purchase.

The rules for purchasing OEM software are not as clear. The definition of OEM software, and how it can be licensed, varies between software vendors. Microsoft software, which is licensed and sold in several different packages, is the most common source of contention. The three methods of purchasing Microsoft software are OEM licensing, purchasing retail (FPP or Full Packaged Products), or buying into a business volume-licensing program. Used software is also available on an individual basis, but usually not from a vendor.

Microsoft breaks their software into categories: desktop operating systems (OS), servers, and applications. Microsoft OEM OSs may be distributed with either a fully assembled computer system or a non-peripheral hardware component, defined as any hardware essential to running a computer. This includes memory, internal drives, mice, keyboards, power supplies, and internal devices. Components that are NOT considered essential are scanners, printers, cameras, and external modems or networking products. For the software to be legal, the seller must also supply a copy of the license so the purchaser can accept the terms and conditions of the agreement. Microsoft OEM servers and applications may ONLY be distributed with a fully assembled computer system. A fully assembled computer system is defined as, at a minimum, a central processing unit, a motherboard, a hard drive, a power supply, and a case.

When purchasing Microsoft OEM software, make certain that you receive the genuine Microsoft CD-ROM disk (which can be identified by the hologram on the disk) or the recovery disk from the PC manufacturer (when purchasing a fully assembled computer system), the COA (Certificate of Authenticity) label to attach to the computer chassis, and other applicable materials (like the instruction manual and license agreement). In the case of purchasing a Microsoft OS, the System Builder who supplies the software with the fully assembled computer system must remove the COA label from the packaging and attach it to the exterior of the computer case in an easily accessible location.

Typically, once an OEM OS has been installed, it is legally tied to the PC hardware on which it was originally configured. Therefore, if someone donates a PC to charity or sells it to another person, the OEM software must also be transferred. If the PC has been upgraded, the upgraded license is also tied to that specific machine. Also, OEM software is generally limited to one installation per copy of the media. This means that all copies of the software installed in different locations must be deleted if the media is sold to another party. While it is perfectly acceptable to sell used software, the licensing agreement must be followed closely to insure legality. At the time of sale, the licenses must be 100% transferred to the new owner, who must accept the terms of the agreement.

As far as downgrading goes, Microsoft has created a fairly complicated matrix to explain what is allowed. All OS, server, and application software acquired through volume-licensing programs is granted the right to use a prior version. If software purchased outside volume-licensing is later enrolled in UA (Upgrade Assurance) or SA (Software Assurance) volume-licensing programs, these licenses gain downgrade rights. Licenses purchased as FPP are NOT automatically down gradable. OEM software follows the rights granted in the OEM license, but is generally NOT given downgrade privileges. One exception is the OEM version of Windows XP Professional, which allows the installation of identified previous versions, defined as Windows 98SE, NT 4.0, or 2000 Pro. For further clarification, consult the specific EULA (End-User License Agreement) included with the software that is being purchased.

I hope this helps!

Until next month…