Windows fees may double

Gartner warns that Microsoft Windows users could face a hike in licence fees when they come to renegotiate their contracts

Users could see their Microsoft Windows licence fees almost double when they come to renegotiate their contracts, analyst group Gartner has warned.

The software giant is taking advantage of a technicality in its licensing terms, which it has previously let pass, according to Neil MacDonald, Gartner's vice president and research director. He said six of his major US clients had recently been affected.

The problem arises with companies that buy windows licences in volume under Microsoft's Select programme. When these companies buy new PCs they usually come pre-loaded with Windows and covered by an end-user licence agreement from the supplier.

Many firms then use the CDs they get under the Select programme to overwrite the PCs with a standard configuration of the software, a process known as re-imaging, using tools such as Symantec Ghost. This ensures consistency across the company's PCs, for example, eliminating unwanted applications.

But Microsoft is arguing that this is not allowed unless the customer pays for a licence upgrade, at a cost of either $117 or $157 (£73 or £98).

Simon Moores, chairman of The Research Group, said many UK users could find themselves affected and called on them to protest vociferously.

"Microsoft needs to clarify what this means," said Moores. "It has implied that it is OK over a period of time. It is important that it is not seen as trying to wring more money from licences."

John Perkins, chief executive of NCC Group, said Microsoft's actions have highlighted the need for users to take proper legal advice before entering into agreements. "But if there are issues that are difficult to get around, the supplier should point them out. The best way to avoid this is for the supplier and user to have an open and honest relationship," he said.

Microsoft said it is "not trying to secure additional revenue by causing confusion over Windows licence compliance".

The software giant did not respond to Gartner's claim that in the past, re-imaging using Select appeared to be permitted. However, it likened the OEM Windows licence to an economy-class air ticket. "Because of the low costÉ it typically does not extend the rights to make changes to the ticket, or to the flight, without an appropriate upgrade fee," Microsoft said.

Microsoft software re-imaging

What's the problem?

Microsoft is charging users between $117 and $157 to let them reload Windows onto a computer bought from an OEM which already runs Windows. This practice is known as re-imaging.

Who is affected?

Companies using the Microsoft Select licensing scheme. Gartner Group estimates that 60% of enterprises could be in violation of their Select or OEM agreements.


This is a technicality in the licence contract that Gartner believes has been present in agreements since the days of Windows 3.1. In the past, Microsoft implied that the practice of re-imaging was permitted, but has now retracted this view.

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