The real lowdown on XP license deadlines

If you've missed the XP deadline, you can always go the downgrade route

With the first end date deadline for the general availability of Windows XP just six months away, June 30, 2008, there are a number of XP licensing questions that are still on the minds of internal licensing desk managers and enterprise IT departments.

Part of the confusion comes from the terminology Microsoft uses to describe the end date for license availability, and part comes from the lack of a simple description of what the terminology actually means.

Following conversations with three different Microsoft Volume Licensing Specialists, most of InfoWorld's questions have been answered.

There are basically just three types of system licenses available:

* An FPP (Full Packaged Product) license, which is the boxed, shrink-wrapped version consumers obtain from retailers.

* A Direct OEM/System Builder license, which comes in two versions. For the most part, a Direct OEM license is what a computer manufacturer like Dell, HP, or Lenovo would have preinstalled on the systems they sell. An OEM System Builder license is targeted more at VARs (Value Added Resellers), LARs (Large Account Resellers), and smaller white-box manufacturers who are registered with Microsoft but who buy their license through a distributor like Ingram Micro.

* Volume Licensing programs, which include large enterprises as well as government and educational institutions. Volume licenses cover only Windows Client upgrades; otherwise the full operating system license is acquired as FPP or through either Direct OEM or OEM System Builder.

The only OS license available through a Volume program is a Windows Vista Business Upgrade. Companies must already have a qualified OS on their systems, such as XP, so terms of buying XP rather than Vista, this scenario is moot. Therefore, the Microsoft end date availability is based on FPP and both versions of the OEM licensing systems.

Both FPP licenses purchased from a retailer and Direct OEM licensees have a June 30, 2008 cutoff date for ordering an XP license.

This does not mean a retailer or an OEM cannot sell XP after that date. It means neither entity can order XP after that date. If a retailer or an OEM wanted to order thousands of PCs with XP installed they can do so as long as the order is placed before June 30.

An OEM System Builder License, used by VARs, LARS, and white-box manufacturers and sold through distribution, have a January 31, 2009 cutoff date for ordering an XP license. Again, if the distributor has enough XP inventory before the January 31 cutoff, it can keep selling XP, and resellers can keep buying it until there is no more inventory, so to speak, left.

The same deadlines apply if you wanted to purchase additional licenses for additional virtual machines. It does not matter. Also bear in mind that the preinstalled operating system may not be transferred to another PC.

Some complications arise due to the fact that some direct OEMs also have System Builder licenses. It is unclear how that affects their sales to the retail market or if selling direct to their largest customers.

If a company discovers it needs more XP-enabled systems but the ordering date is past and the distributors they order from have no XP inventory left, is it too late? The surprising answer is no. Companies can trigger the so-called downgrade option. Microsoft will allow companies to downgrade to XP after an initial purchase of Vista. In other words, if the deadline has come and gone the company orders X number of computers from their supplier with Vista, it then uses the downgrade option to reinstall XP.

One Volume Licensing Specialists at Microsoft said that while this may appear to be paying twice for one operating system this is not the case. The purchaser simply owns both OSes, and if in a year or two the company decides to finally upgrade to Vista, it already owns that license.

What if your company has a site licenses for, say, 5,000 copies of XP and have used only 4,500. Can it get the other 500 of XP indefinitely? The answer is yes, if they were ordered before the deadline. "This is a perpetual license," said one of the specialists.

In point of fact, the current XP ordering deadlines are nothing new, according to Rob Horwitz, CEO of Microsoft Directions, an independent company that follows Microsoft technology. OEMs have always been given about two years to transition to the new operating system, said Horwitz. "In the beginning, Microsoft thought they could speed up the time for shifting to the next OS, but certain realities came into play, such as responding to customer demand for more driver availability and bug fixes in Vista," said Horwitz.

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