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Windows Vista's Enthusiastic Licensing Restrictions

My name is Koroush Ghazi, and I run the site As you can probably guess by the site's name, I like to tweak and tinker with hardware and software. I'm what you might call a 'PC enthusiast': one of those guys who builds his own PC, regularly upgrading it to keep up with the demands of modern gaming. When Paul asked me to write a reply to his Licensing Changes to Vista article I jumped at the chance, given that this issue really affects guys like me. I know from the emails I've received, and from comments I've read by other enthusiasts across the Net that Vista's explicit limitation on transferring only once to another machine in particular has caused genuine frustration, confusion and anger. I'm here to try to put across the enthusiast's point of view, something which both Paul's original article and Microsoft may have lost sight of.

Let's be clear about one thing before we go any further: I'm not here to get into an endless legal debate over End User License Agreement (EULA) wording. I have neither the legal training nor the patience. Both Paul and Microsoft have admitted that XP's EULA wording does not state clearly enough the conditions under which it restricts the transfer of Windows XP from one machine to another by the same owner. Given the EULA is a binding legal document, this is an oversight which seems careless in my opinion, and the confusion has only been reinforced over the years. Case in point: I've successfully transferred my copy of Windows XP Professional through 3 completely different new systems over the past 5 years, along with several hardware upgrades, activating it many times along the way, at least one of these by phone. At no point did I ever encounter anything or anyone telling me that what I was doing was wrong, nor was I ever asked to explain my need to reactivate.

You might say that this only demonstrates how generous Microsoft have been in the past, and that having picked up on the confusion, they have now simply clarified their position on transfer rights in the Vista EULA to avoid future problems. I would argue otherwise. To me and many other people this move has only served to open our eyes to just how draconian the Windows licensing arrangements are - and this is what all the fuss and bother is about.

The truth about PCs

At the heart of this issue is the concept that Windows is bound to a particular 'device', and not to a particular human owner. This means that when you buy and install Windows, you're buying it specifically for one fixed PC (device), and should that PC change significantly over time, you no longer have the same device, and thus you eventually forfeit your Windows license given enough changes.

Let's think about the implications of that for a minute. Twenty years ago when computers were rather standardized pieces of equipment with little variance from one unit to the next, and little scope (or need) for significant modification or upgrading, it may have been valid to refer to them as a discrete device and license software this way. Yet here we are in the 21st Century, at a point in time when the PC hardware market is probably at its most prolific, churning out dozens of brands of a large variety of different components, all of which can be used to create completely unique computers which can in turn be reconfigured many times over during the course of their life. It seems absurd to me to license an OS to a fixed device.

Paul Thurrott argues that "...fewer than 5 percent of PC users ever open a PC case let alone perform major hardware surgery." I'd be interested in knowing firstly where this statistic comes from, but more importantly, what the trend line looks like - my observations would suggest that if anything the trend for PC users opening their cases and upgrading components is rapidly increasing. But OK, let's stick with the 5 percent figure. A couple of years ago Steve Ballmer, CEO of Microsoft, predicted that the number of Windows PC users across the world would reach over 1 billion by 2010 with other estimates placing it closer to 1.3 Billion. I'm not sure how we're tracking right now, but given these estimates, even at 5 percent that converts to roughly 50-65 million people. So it's not just me and a couple of mates whipping the cover off our PCs, it's actually a fairly large group of people.

Furthermore, it is this 5 percent of the Windows PC market that plows vast sums of money into the PC hardware industry and drives high-end hardware sales. Most pre-built systems do not come with expensive high-end graphics cards, fancy motherboards, low-latency RAM, fast hard drives or aftermarket coolers for example. These are all usually purchased as upgrades, at significant cost. Entire companies base their business models on catering to aftermarket purchases of standalone components.

But why should Microsoft pander to these hardware junkies who have more dollars than sense? Why do they upgrade so often anyway, are they nuts? It's a bit more complex than that. Let's look at one common reason for upgrades: gaming. Take for example Microsoft's much-touted new DirectX 10 (DX10) graphics API for Vista. Upcoming games such as Crysis and Microsoft's own Flight Simulator X are going to take advantage of DX10's capabilities to produce enhanced graphics. Yet to utilize DX10, PC owners will need to buy a DirectX 10-capable graphics card. And since these will only be available with a PCI Express interface, that likely means a fair few people will have to upgrade their motherboards as well, which in turn may mean RAM and even CPU upgrades will be needed, if only because of CPU socket and RAM architecture changes.

So a Vista user who started out with one 'device' prior to the release of DirectX 10 hardware, may well wind up with a new device after necessary upgrades to take advantage of a core feature of Vista. In return they've just used up their one and only Vista license transfer. Heaven forbid they decide to upgrade their system again in the coming years - which is quite likely given the existing pace of upgrades for gaming - they will be faced with either lying about having a 'catastrophic failure', or buying a new Vista license. And at $399 for Vista Ultimate (the likely OS choice for enthusiasts), this isn't just a couple of bucks we're talking about here.

How did we ever get to this point?

I am neither pro- nor anti-Microsoft. I'm old enough to realise that Microsoft is a large corporation that invests millions of dollars into software development, producing applications and Operating Systems which have greatly increased productivity around the world. I'm certain that nowhere in their Mission Statement does the phrase "screw over the customer" appear. Yet strangely enough that's exactly what seems to be occurring with Vista right now.

I don't want to launch into a lengthy product review of Vista, as it is neither a finalized piece of software, nor could I do a better job that Paul's own Sticking with Windows XP in a Windows Vista World article. The bottom line is that at the moment I am quite underwhelmed with what Vista has to offer the end consumer. I'm sure over time its feature set will mature and its advantages become more effectively utilized and streamlined, but to me right now it feels like a dumbed-down, prettier yet more annoying version of Windows XP. To be fair, when Windows XP came out in 2001, it too was accused of being a similar variation on Windows 98, but is now well-liked by most users. So only time will tell on that front.

The key point however is that Vista is not all we expected it to be. It is well overdue, is going to be more expensive than ever, has increased Digital Rights Management (DRM) and Anti-Piracy measures (read Windows Genuine Advantage Notifications), and as we now know it will have a very restrictive license.

My training as an Economist tells me that only a company with significant market share, when faced with little competition in said market, can get away with a scenario like this. The games I buy don't have all of these measures or restrictions. The third party applications I buy don't have all these measures or restrictions. Yet apparently I am forced to accept that the one key piece of software my system cannot do without comes with all these added goodies, and at a premium price to boot.

Microsoft has had aggressive competition on a variety of fronts, and this has resulted in the revamping of key components of their software. For example it was only under the challenge of the Mozilla Firefox browser that Internet Explorer is being transformed into a much better product in its 7th iteration; the popularity of iTunes has automatically resulted in an upgrade of Windows Media Player's feature set; and Windows Live Search bears an uncanny resemblance to Google's famous search portal.

But Linux and Mac OS X have not made large enough inroads into the Windows-dominated world of operating systems. While fine products in their own right, and certainly a source of shall we say 'inspiration' for Windows Vista's new features, they just don't present most PC users with a viable alternative given the investment most people have made in familiarizing themselves with Windows. The truth is we live in a Windows world, and enthusiasts, particularly gamers, are virtually forced to upgrade to Windows Vista if they want to continue using all their favorite games and applications - and indeed their hardware - with a minimum of fuss and bother in coming years.

Where do we go from here?

On its own, the restrictive licensing arrangements for Windows are not a deal breaker for me. I'd still happily buy Windows Vista with its current proposed license, if it were not for the many other aspects of this operating system which combine to really sour things. At the moment Vista is looking like a real money pit for PC enthusiasts, and XP is looking more and more attractive to hold onto at least for the coming year. Or to put it another way, piracy of Vista is looking more and more attractive to an even larger group of people now.

It genuinely surprises me that Microsoft and Paul Thurrott have marginalized PC enthusiasts over this issue. I don't get it. PC enthusiasts have been diligently testing the Windows Vista Beta and Release Candidates for Microsoft absolutely free of charge, providing valuable feedback for example. PC enthusiasts drive key hardware markets, which in turn drives innovation. Yet currently we're being treated like an unwanted step child.

Why are enthusiasts being ignored? Aside from the fact that we're talking about tens of millions of people being affected, there also seems to be a bit of a contradiction. If Microsoft genuinely believes the clarified restrictions only affect a small group of people, then honestly why change them in the first place? It seems to me it only disenchants an influential group of users, unfairly targeting their legitimate need to upgrade often to keep pace with gaming and other requirements. PCs are no longer a 'box' that you buy, keep for 3 years and never upgrade or tinker with. An increasingly large group of people do upgrade their machines often, and in fact companies like Microsoft, Nvidia, AMD and Intel do everything in their power to encourage it.

To me there seems to be a relatively easy way out of this dilemma for Microsoft: raise the transfer limit to at least three additional new devices if not more. This will give enthusiasts plenty of headroom in the coming years, it should ensure a reduction in piracy and an increase in sales - particularly for the enthusiast-orientated Vista Ultimate, and will be a sign of good faith on Microsoft's part. And as Microsoft and Paul claim, it should have no impact on the 'vast majority' of users who apparently don't upgrade often.

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