The Windows 7 System Builder’s Single-License Experience

by Rich Menga on Jul 14, 2010 | 27 comments

Recently I was called upon to load the Windows 7 OS on a PC for a neighbor. I told him what the price of the OS was, he gave me some cash and I purchased a System Builder’s single-license copy of Windows 7 Home Premium 32-bit edition. The price was $100, is a full edition (meaning not upgrade) and non-transferable (meaning it can only be used on one PC).

As a side note, if you want a license that is transferable, you need to purchase the "full retail" version.

Most of you out there have probably never seen a Windows 7 System Builder’s edition. The OS looks the same but the packaging is totally different.

This copy of Windows 7 was bought from NewEgg.

Here’s what it looks like.

DSCF1099

Above: You receive the OS in nothing but a plain padded envelope; this is what you’re first treated to after taking it out of the envelope. You’re seeing the outer sleeve. The other side is nothing but a ton of fine print not worth reading.

DSCF1098

Above: There are two things inside the sleeve. This is the first part. It’s instructions telling you where the Product Key is (which I’ll mention in a moment) and where to place it on the PC. It also states that as the system builder, you are responsible for supporting the OS for the customer.

DSCF1100

Above: This is the second and most important part of what’s inside the sleeve. It’s a plain DVD case. In the case is a small Windows manual and a single disc inside (the full retail versions come with two discs for both 32 and 64-bit editions).

Said very honestly, I wish all versions of Windows shipped in cases like this. It’s better-than-average plastic (seriously, it’s very sturdy), easy to open, easy to take out the disc and put back when done and has strong plastic clips on the inside to hold the manual. This is for all intents and purposes a perfect DVD case and is so much easier to deal with compared to the full retail case.

DSCF1101

Above: The opposite side of the case. The bottom sticker is where the Product Key is, and is the only place where you’ll find it. The Product Key is literally a sticker that you purposely peel off and place on the PC that has this specific license of 7 installed on it, just in case the customer ever needs to reinstall the OS for whatever reason.

If you ever wondered whether the sticker on the side containing a Windows Product Key actually mattered, when you’re the system builder, it certainly does.

Even though I’ve written about this before, here are the main differences between a System Builder’s and Full Retail license:

Only one disc (32 or 64-bit depending on which you bought).
License is non-transferable (if you upgrade the motherboard and/or try to install it on another PC, the license will cease to work).
It’s roughly $50 less than a Full Retail version.

Final notes:

You may save $50 getting a System Builder’s license, but the non-transferable license may come back to bite you in the future for desktop PC owners, so be advised of that.

System Builder’s licenses are a no-brainer for laptop owners, because it’s extremely unlikely you’d ever change the motherboard out. If you’re a laptop owner and want 7, go ahead and save the $50 with a System Builder’s license. Just make sure you get the correct version (32 or 64-bit) particular to your processor. If unsure, go with 32-bit.

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Dave Ecklein
I wonder if the current OEM Windows 7 policy locking it to a specific motherboard, if there is no work-around, amounts to an illegal practice (restraint of trade) on the part of Microsoft. And imagine the effect on both consumers and those (like myself) who assemble machines for them. What happens if the motherboard burns out? What happens if the consumer subsequently buys software (or a peripheral) which requires a motherboard upgrade? Should the price of this include another $100 tribute to Microsoft? Even XP with all its activation nuisances was not this restrictive. Until they change the policy, I am forced to explain the difference between OEM and “retail” to my clients and leave it up to them whether they want to gamble the extra $80 that they won't change their motherboard before Windows 7 becomes obsolete (judging by Vista, it could be sooner rather than later).
As to the piracy argument. If Microsoft is really so paranoid about losing revenue, why don't they just include a hardware device (“dongle”) that would plug into a parallel or USB port, as many high-end application programs do. Then you would really be buying the software for a single machine, and it could be transferred to either another machine or the same machine with different hardware without disturbing the delicate slumber of the Redmond giants. The cost of doing this would be small, and worth it from a public relations standpoint; it is not good business practice to attempt to make money from misfortune's collateral damage.

http://menga.net Rich Menga
What happens if you have a legal Windows license and you have motherboard burn out is this:
I had a motherboard go bad and at the time I was using Windows XP Professional. The license failed WGA (Windows Genuine Advantage) because the mobo had changed.
I called Microsoft support directly, told them what happened, they reactivated the the license.
That's all there is to it.

Dave Ecklein
Rich-
You are correct about XP. This happens quite often when I upgrade XP computers for clients. But apparently Microsoft is not allowing it with Win 7. That is what this discussion is all about, isn't it?
This XP reactivation policy may be an annoying nuisance, but we can live with it. However, charging a client who gets a motherboard replaced another hundred dollars for a new Win 7 license, in addition to what I have to charge for the motherboard itself, seems an outrage to me.
The client will rightly find it outrageous. Fortunately, so far, I have not had to upgrade or replace a motherboard in a Win 7 system, too few of them out there around here as yet, so the issue has not come up. I hope that before it does, Microsoft will revert to its more relaxed XP policy that you describe. Taking part in the apparent current policy makes me feel like an unethical collaborator – one alternative is to state the caveat up front and let the client choose between OEM and retail versions of Win 7 when ordering the computer. The other alternative is another operating system entirely.

http://elianthony.wordpress.com/ Eli
“…one alternative is to state the caveat up front and let the client choose between OEM and retail versions of Win 7 when ordering the computer.”
Dave, this sounds like the best option in that situation. Give the client the pros and cons, and let them decide.

http://elianthony.wordpress.com/ Eli
Rich, now that isn't nearly as bad as shelling out another $100. I'd be happy to make a phone call to get all of this straightened out instead of paying more money. Is this an XP only thing?

http://menga.net Rich Menga
If it's a System Builder's license for 7, technically the answer is no, however (and I really shouldn't say this), if you state the computer was damaged due to an Act of God, such as lightning, MS support will usually reactivate the license without issue. If you say you replaced the mobo however per an upgrade, you won't get anywhere and you'll have to pony up for a new license.

http://elianthony.wordpress.com/ Eli
Good to know, thanks for the info.
Dave Ecklein
Rich-
Trouble is, many lightning-damaged systems do not show symptoms to the end-user right away. It is therefore sometimes hard to prove lightning damage for insurance purposes. And, consider that if the machine is a couple of years old, most any motherboard replacement will be an effective upgrade. Replacing an obsolete original might be difficult.
If any Microsoft person in a position of authority happens to read this, I have a modest suggestion. Should they maintain something like the OEM Win 7 policy, why not modify it to charge a modest reactivation fee (say 20% of the purchase price)? This would seem a lot more reasonable than forcing purchase of an entirely new license, and just might be acceptable to many end users stuck with such a license and wishing to upgrade.
What do you think?
http://menga.net Rich Menga
Microsoft is most of the time very lenient when it comes to OS license reactivation; they're not like an insurance company that would have to send a rep to your house to ensure that what you're saying is true. The only thing they care about is software and not hardware in this specific instance. All they want is relative assurance a single license is being used on a single machine per the licensing terms.
There is in fact a version of your suggestion in place by MS call the “Anytime Upgrade”, however the way it works is horrible.
What would work is if Microsoft sold an OS future upgrade discount option, e.g. “For an extra $25 you pay for this Win license now, you will receive 50% off the next version of Windows in the future for the next 5 years.” On purchase in the future, your Product ID is validated for your old Windows, and 50% off is applied to the new license.
This is similar to purchasing an “Upgrade” edition of Windows now, but with a much larger discount.

http://elianthony.wordpress.com/ Eli
“License is non-transferable (if you upgrade the motherboard and/or try to install it on another PC, the license will cease to work).”
This is terribly evil. How anyone can still defend MS when things like this go on is beyond all logic. Being in FL, lightning and Thunderstorms are a regular part of life. You could be using your computer, get to use the bathroom, and have a storm roll in and a bolt of lightning toast your motherboard while you're gone for just a few minutes. Pathetic, absolutely pathetic.
Other than this, the system builder's version look like the best way to go when installing Windows 7.

http://menga.net Rich Menga
It doesn't “go beyond logic” nor is it “pathetic” or “evil” at all. It's a system builder's license, meaning it's for a single system, therefore the license cannot be transferred. If you want a transferable license, pony up the extra 50 bucks. Considering the full retail license cost of 7 is less than Vista and XP Professional was, if you're unwilling to spend the cost on a full retail license, you're just being cheap.
And by the way, I live in Tampa Florida, lightning capital of the world. If anyone is dumb enough to run a PC without proper power protection here, then you deserve to have your box fried by a strike.

Dave Ecklein
Rich-
Surely you know that electrical equipment protection from lightning is never perfect. Eli never said that his motherboard was actually fried by an electrical storm, it was just a hypothetical as I read it. Alternatively, Eli's hypothetical motherboard could have been an infant mortality – I have seen many in over two decades of experience with PC motherboards. Or suppose a tree fell on his computer and broke the motherboard? Why should Microsoft extract another pound of flesh in such cases? This is what bothers Eli and many thousands of others.
But I am trying to understand your response to Eli's (and my) point. Even if such a restrictive license should not be finally judged restraint of trade, it represents business practice worthy of Scrooge and will have an public relations impact even beyond those directly affected. Microsoft may be a near monopoly, but there are others waiting for them to go too far (Apple, Linux, and even potential future congressional investigation).
No offense, but in the interest of full disclosure are you compensated in some way by Microsoft Corporation? Or are you an authorized reseller (or have some other contractual arrangement)? If so, your response might make some sense to me. One does have to hunt with the hounds or run with the hares.
I hope you won't go away. I am in the business, and I sincerely want to understand your response.

http://menga.net Rich Menga
I am not compensated by Microsoft in any way, nor do I sell their products.
If you want a transferable Windows 7 license, cough up the extra 50 bucks. Case closed.

Dave
Rich, no offense, but it looks like you are carrying water for Redmond and should be paid for it.
That being said, you have only stated the facts known to you. For my part, I hope the case is not closed, and that Microsoft will change its policy.
http://menga.net Rich Menga
Almost every time Dave (owner of PCMech) writes something positive about Apple products (he's a Mac user), he gets comments similar to yours inferring or outright accusing he's in bed with Apple.
Almost every time I say write something positive about Microsoft products, I get comments like yours inferring or outright accusing I'm in bed with Microsoft.
It's as if you only consider complaints to be honesty and positive or neutral commentary to be “he must be getting paid to say that”.
Whatever.
Dave Ecklein
Rich-
Relax. You may deserve some bouquets rather than all brickbats.
No intent to make comments inferring or outright accusing you of being “in bed with Microsoft”. Bet you dream about them a lot, though! That is as far as I will go negative on you – honestly, you are performing a service by bringing the issue out in the open. I'll bet not many folks peddling computers in the big box stores are so candid about calling their customers' attention to the fine print as you are. Intentionally or not, you have probably belled the cat for many reading our dialog on PC-Mech.
I merely asked whether you might have a possible conflict of interest. If you deny it, that is good enough for me. You certainly do give the appearance of going to bat for Microsoft, since your tone implies you are beyond merely stating the facts – your judgment that Microsoft's Win 7 OEM policy is just and fair seems apparent. If this is an erroneous impression, please accept my apologies.
It seems not only Microsoft does sharp practice in its own interest and against the consumer, but that it can count on some people with no stated material connection to Microsoft to back them up.
Meanwhile, I may have to explain this issue to clients asking me to repair or upgrade their computers. Many of the computers that people now buy elsewhere are probably Dells or some other discount label and have OEM Win 7 on them, and many will have issues with the cheapskate motherboards or the dinky power suppliy or inadequate cooling often also installed by the factory – all often causes of premature motherboard failure.
This puts me in a bad place when repairing proprietary computers (not my favorite job anyway, frankly), but in a good one when I explain how they could do much better with a white box machine built by someone who frankly discloses the issue here, and poses alternatives.
As far as Dave (the owner of PC-Mech, not me) goes, in spite of being an Apple user, he has done as much as anyone I can think of to help people (particularly novices) put together their own computers in his informative emails, websites, and other services offered. Last time I checked, you only do this in the PC world. Whatever the merits of Apple may be, it is a much more proprietary planet – and probably Microsoft envies that position.
http://menga.net Rich Menga
The call to attention per the license terms is something everybody should be aware of, and that's precisely why I mentioned it in the article in the first place. On read there were probably many that said, “What?! I can't transfer a System Builder's license? Well, that's one I won't be buying!” If that happened, I consider that a *good* thing so people don't buy into something thinking it's something else.
And yes, tell your clients about why the System Builder's license of 7 may be a *bad* choice for them. Explain while it costs more for a full retail licence, it's transferable and can potentially save cash in the future (i.e. if mobo dies, license can be reinstalled without issue).
Is it crappy you have to explain this stuff to clients? Yes. It's a huge thorn in the side from the system builder's (i.e. you) perspective to have to sit the client down and describe licensing differences.
Dave Ecklein
Rich-
Thanks for admitting that for some of us, the OEM Win7 policy is, at least in effect, “crappy”. Who likes to be the bearer of bad news? It is one thing to explain the difference between OEM and Retail to a client before I build the machine, but it is another to explain it when a client brings in one for repair or upgrade bought elsewhere. Most of them will be bringing in mass-produced boxes with OEM licenses. I would wager few will have understood the limitations beforehand.
Upgrades and repairs are now the major part of my business, due to saturation of the market and the sputtering economy.
Can you tell us how far the OEM license restriction applies – does it go beyond motherboards? Surely it can't cover power supplies – hard for M$ to detect a new one there. Although it is detectable, I assume you could upgrade RAM safely. But how about a hard disk upgrade or replacement? After doing this with XP, I often (but not always) have to re-activate. Any other maintenance icebergs out there you know of that might lead Microsoft to judge you are trying to “transfer” the Win 7 OEM license? Suppose someone brings in a machine with VGA built-in to the motherboard, and has it disabled and a high-powered graphics card installed – the motherboard has indeed changed (or rather dropped) functionality and become “different”. Will this require a new license?
I am not trying to badger you here and fully realize you are not the M$ legal department, but I really want to know. It is better to explore hypothetically than to spring a $100 surprise on a client after finding out by experiment.

http://elianthony.wordpress.com/ Eli
Rich, come on man, you know that in the time it takes you to get rid of last night's burritos on the throne a storm can blow in. It CAN happen to the best of us. Thats all I was saying, that even if you always do what you can to prevent it, you can get screwed by lightning, or any other type of problem that can damage our PC's innards.
And thanks to not ponying up an extra $50 up front I now have to buy a whole new copy for at least a $100?!? What about upgrading hardware?!? This is just as pathetic as Ford saying you need to take your car's key to the dealer to get it reflashed after you install that nice little K&N air filter in your mustang. You'd quickly say WTF! This is MY car, and if I want to modify the car thats my business, and I'm not going to pay you a fee every time I do anything to it just for the pleasure of driving a car that I ALREADY PURCHASED FROM YOU!!!!
Really, how can anyone defend this practice when one considers all of the potential implications. Its obviously an unscrupulous practice.

http://menga.net Rich Menga
The problem here (and I'm seeing this a lot) is that most people think “System Builder's” means “WHOLESALE”. Incorrect. It means “System Builder's” with emphasis on system meaning single system. Right on the documentation for the product itself it states verbatim it's for a single system and cannot be transferred.
Anywhere that sells this type of license (including NewEgg) states this right up front. This information is never hidden.
Here's a direct quote from NewEgg's product description for this type of license. I've put the part to note in bold:
Use of this OEM System Builder Channel software is subject to the terms of the Microsoft OEM System Builder License. This software is intended for pre-installation on a new personal computer for resale. This OEM System Builder Channel software requires the assembler to provide end user support for the Windows software and cannot be transferred to another computer once it is installed. To acquire Windows software with support provided by Microsoft please see our full package “Retail” product offerings.
How could anyone miss that part when it's spelled out right in front of you before the sale of the license?

http://elianthony.wordpress.com/ Eli
Rich, I see your point here. I know what you're saying, but what I'm saying is that its Microsoft's policy on this that is terrible. Whether they tell me about it up front or not has no bearing on the right/wrong aspect of it.
If anyone has a big enough problem with this, they can leave Microsoft products to other people. Thats what many have done. I've been MS free for years now (at home anyway).
http://menga.net Rich Menga
I disagree in the respect that if Microsoft truly wanted to be pricks about it, they could say, “Oh? Buying a System Builder's License are we? May I see your business tax ID?” No such information is required. Anybody can purchase it.
However I agree in the respect that MS to this day has too many damned versions of the same thing, confusing the crap out of everybody. It's bad enough there's Starter / Basic / Home / Pro / Business / Ultimate, but there's also a System Builder's license for each, and for each architecture (32 or 64-bit). That's a total of 18 difference licenses – and that's not even counting the server editions!
http://elianthony.wordpress.com/ Eli
Son of a gun would having to show your tax ID info be a pain. I guess it can always be worse.

Stormy
This is to Rich Menga,
I am coming at you head on. I take exception to both your attitude and opinions.
#1, You are entitled to your opinions. I have absolutely no disagreement with that but I take exception to your refusal or inability to see Corporate Greed for what it is and it does not have a damned thing to do with having to pay an extra $50. Nor are you so perfect as to berate another User for their use or lack of use of a power surge protector
A. When a person buys an Operating System then they should own it. Period! If you are using an OEM in good faith, on a single computer whose motherboard is destroyed then replacing the circuit board and reinstalling the OS is not using it on a “New Computer” as Microsoft states. The equivalent would be Chevrolet insisting you pay the cost of entire new car if you replaced a blown engine on a shiny new Chevy.
B. It is my position that you should be able to install the OS a completely new computer provided it is no longer in use on any other computer. This does not take deprive MS of anything. It is as I stated previously, Corporate Greed. Pure and Simple. The average computer user has no clue what the fine print of OEM and Retail means and it borders on criminal MS has gotten away with it for so many years.
C. I don't bother with Microsoft for my personal use. I use Linux but I must stay current with MS as I build and repair systems for others which are primarily MS and I take great pains to explain this Draconian BS to clients and when possible convert them to some Distro Of Linux.
I am not going to sit idle while some Apologist for Microsoft gets on his soap box with a belligerent tone and berates others for not agreeing to the MS' OEM line.
Put this in your pipe and smoke it!

http://menga.net Rich Menga
A. Absolutely nothing in the End User License Agreement (commonly known as a EULA) for a purchased OS states you own it. Not for IBM. Not for Apple. And certainly not for Microsoft. You never “own” your OS. You didn't write the code. What makes you think you own it? The purchased license's function is to grant you permission to use it as the company who made the OS sees fit.
B. You can install a Windows OS on a completely new computer if it is not in use on any other computer box and the license has not been used prior – or – if the OS license terms deems it transferable.
C. Think Microsoft's OS EULA is tough to explain? Try explaining GPL. It's ten times worse because it's a “philosophy” that takes an hour just to describe how it's supposed to work.
Your pipe just got snuffed.

Oncereal
Hello,
First, thanx for the article. it was very useful.
Second, regarding the discussion, I understand that MS has every right what so ever to use which policy they benefit more. But, there is a mistake in naming the exchange between the end-user and retailers as selling and purchasing. It should be called renting on a stand price till ur motherboard fails or buy a new PC…. This what it is. cuz we will always use MS. and we will always buy a new computer eventually or upgrade them.
I prefer that MS sell license based on time period, then I will know what i’m paying for and what length of time.

Dave
Oncereal- You suggest a time-period license; very interesting as an optional way out of this situation. I think it would be acceptable if the price were pro-rated; that is, suppose the Windows 7 had an expectation of four years before becoming obsolete. That is reasonable, considering the long life of XP (almost ten years and it is not really dead yet, in spite of Microsoft’s hopes). So, to renew the license (at one-fourth the current cost, say about $30 or so) annually would be no different than what many antivirus outfits charge. I like the idea, and it would not involve surprises for anyone. Plus, if Microsoft comes out with a durable operating system (and XP was the closest), they could expect renewals to go on for more than the four-year par. That would give incentive to M$ to deliver a decent product, and allow them to be restrictive without looking like an ogre, if they so choose, about disallowing transfer of license upon change of motherboard or whatever. It would just mean starting a new time-limit license, with a maximum out-of-pocket cost of $30 to the consumer – I don’t think too many of us would object to that. It would give the same anti-piracy protection to Microsoft without the bad PR. I hope someone having an inside track with Microsoft is reading this.
Meanwhile, I will probably be loading new machines for stock with Ubuntu 10.4 or openSUSE to at least test them, and let the client end user decide what he or she wants to do – accept it with Linux on it or pay extra to have Windows installed instead. Fortunately, much of my business (such as it is in these trying times) is with those who load their choice of OS themselves, so I am thankfully spared all this gnashing of teeth.