Virtualizing Windows may violate your license requirements

Parallels, a nifty piece of software that puts simple OS virtualization into the hands of the average desktop user, released a product dedicated to helping people upgrade from Windows XP or Vista to Windows 7. It takes the OS currently on your hard drive, along with files, settings, and programs, sticks it in a virtual machine, and installs Windows 7. It then takes all the settings, files, and programs from the old OS and applies everything to Windows 7. It's a hassle-free way to upgrade, and many users that can't afford to spend the required hours migrating settings and installing software will likely be pleased with Parallels' solution.

One customer that isn't happy, however, is Microsoft. In a statement to Cnet, Microsoft says that it can't endorse Parallels because their method violates Microsoft Windows licensing requirements. Apparently, the right to virtualize a Windows OS and run it alongside another Windows OS is a privilege only available to certain license plans. Gavriella Schuster, Microsoft's general manager, explains.

"Microsoft does not endorse moving the user's desktop from a physically loaded OS into a VM as a consumer solution, because the vast majority (more than 90 percent) of consumers do not license Windows under a license that would allow them to transfer Windows into a virtual machine, move Windows to a different machine, or run a secondary virtual machine that is not running XP Mode on the same machine. Without these license rights, most consumers will not be properly licensing Windows when using the virtualization features of Parallels' product."

In order to legally use the software, Microsoft requires you to have an enterprise license with a Software Assurance contract. Needless to say, the target demographic for the Parallels product isn't purchasing an enterprise license. Parallels hasn't released a solution for this yet, and is just saying that "We require customers to verify they have the proper license," according to a representative. Microsoft is still looking into the problem.

Microsoft isn't trying to shut down the operation by any means. In fact, the tool is a great opportunity for Microsoft to get Windows 7 into the hands of users who would otherwise find the task of upgrading too daunting. We're not sure what the solution will be, but don't expect Microsoft to just rule out the Parallels option altogether.

Image courtesy of Cnet

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Well maybe the so called software developers at Parallels should be inserting into their program to check the product version of the OS that you are trying to virtualise before allowing it to do it. How easy is that? The Product Versions informations are all available free from Microsoft or even on the web. How hard is that? They're just lazy or maybe they're more interested in making money from allowing people to break licence agreements. If I owned Microsoft I would take it to court to make them fix their app as I'm sure every other OS maker would do. I wonder what Apple would do in this situation? As if they would let it slide!!

Ahh... Took me a little bit to figure out what they were getting at. XP had no rights for virtualization and you needed Ultimate/Enterprise edition of Windows Vista for those rights. Windows 7 includes them in most editions now I think.

Microsofts activation is such a bad process.

I know so many people that have the same license on many computers; Just because a part changes on the PC doesnt make it a new PC.

If Microsoft wanted to be bigger nubs than they already are, they would have everyone connect to some authentication server everytime people wanted to go onto their computer. But that would mean monopolizing the internet and making it a requirement Microsoft wont ever win.

PS. Long live Linux.

Microsoft and other companies really need to consider changing their view toward Virtualization for the consumer market.

OS are not good at being able to compartmentalize specializations; it is hard to have a gaming, development, and content creation box in one. The installation crap all over each other, the registries get bogged down and the uninstallers don't do proper house cleaning. So they wonder not only regarding upgrading to a New OS, but using your current one. No one wants to have all these machines in his house. It was cute once, but it isn't anymore. Electric bill and the heat generated are concerns for power users too. Consumers and professions desktops would benefit from either a OS that can better compartmentalize, or allow virtualization happen on the consumer desktop.

It is an area which there can be a lot of growth and needs improvement. It will give GPU and other expansion card manufacturers a reason to write software so that their hardware can play nice and perform much better in a virtually hosted OS. The one thing that holds me back from really enjoying virtualization is 1, the kind of issues like this with Microsoft and 2, that GPUs are not virtualized for everyone, the consumer. CPUs provide virtualization hardware in specific models and I have learned that GPU companies can do this with driver/software support!

I would not mind purchasing an OS and pay a reasonable amount to Virtualizes given I can take advantage of all my hardware, like having a KVM and virtual network all in one box. I know it would make my experience more productive.

i bought a copy of windows 7 looking froward to buying a new pc (and building it from parts) a few months later. i installed it on my old system first and activated. when i built my new system i could not uninstall windows 7 from the old system (there is no means to do so, i'd have to buy another full copy of windows and install it over the win 7 installation). so i clean installed win 7 ultimate on my new machine and went to activate. the online activation would not work. so i had to call in and say it was only installed on one computer.
now when i put my old computer back online, i will buy another copy of win 7 ultimate and input the key and activate. but it was a real hassle and should've been covered by the $400 cost of the windows full ultimate license. especially considering i could've gotten an OEM clean install version for a quarter of that cost.
as for upgrading from xp to 7, well according to the retail upgrade box, you cannot use the upgrade version to go from xp to 7. it says right on the box it requires windows vista.
as for virtulization, iirc on win 7 at least you need a full retail copy of xp to run in virtual mode on 7.
i wonder if this program works for upgrade versions or only full versions. either way going from vista to 7 you can install from windows(not a clean install) and keep all of your settings and programs installed on the first installation. a second installation will wipe settings and you will have to reinstall programs though. the same goes for xp to vista or from vista to vista.

treemonster
i had to call in and say it was only installed on one computer.

This seem perfectly fair to me. One license is for one computer. You are supposed to remove Win7 from your old system before installing it on the new one. I'm with Microsoft here
now when i put my old computer back online, i will buy another copy of win 7 ultimate and input the key and activate.

Again, one license per computer. You are supposed to install Win7 fresh on your old box, as you would have removed the original copy when transferring it to your new PC.

it was a real hassle and should've been covered by the $400 cost of the windows full ultimate license. especially considering i could've gotten an OEM clean install version for a quarter of that cost.

Just because its $400, doesn't give you the right to run the same license twice. You are also not allowed to use OEM copies on PCs you have made yourself (Unless you sell those PCs)

I'm a Linux user (Ubuntu is my main desktop distro, and most of my servers run Ubuntu as well), however as weird as Microsoft's rules can be, one thing is clear and fair to me: You can't run the same license twice. Simple.

Edited by jonnytabpni, May 26 2010, 3:49pm :

jonnytabpni said,

This seem perfectly fair to me. One license is for one computer. You are supposed to remove Win7 from your old system before installing it on the new one. I'm with Microsoft here


Again, one license per computer. You are supposed to install Win7 fresh on your old box, as you would have removed the original copy when transferring it to your new PC.


Just because its $400, doesn't give you the right to run the same license twice. You are also not allowed to use OEM copies on PCs you have made yourself (Unless you sell those PCs)

I'm a Linux user (Ubuntu is my main desktop distro, and most of my servers run Ubuntu as well), however as weird as Microsoft's rules can be, one thing is clear and fair to me: You can't run the same license twice. Simple.


i have nothing against one license per computer. but transfering that license should be easier.

there is an option to change the key on an install of windows. i don't know what other purpose this serves than to use a new key on old computers during or after a transfer to a new computer.

if that's true then why do major PC part vendors such as newegg sell OEM copies that fresh install for a reduced price? i had to choose between a $120 OEM full version of win 7 ultimate or a $400 full version of win 7 ultimate. although i chose the retail version for $400 perhaps the limitations should be made more clear.

and while i am not interested in using the same license on two computers, the transfering should be made easier, both to uninstall and to reuse the license on a new PC. imagine if this extended to games or office software. imagine if steam only allowed you to install your games on one PC once? while normally you shouldn't install the same copy of a program or software suite on more than one computer with only one license, what's the problem with transfering the software from one old PC to a NEW PC. especially if the intent is to buy a new license to use the old installation on the old PC later and there is a function within that software to to add a new license key to that same installation. and as i stated you can't simply UNINSTALL windows. if there is even a method to wipe the primary disk of a win install without installing a new OS it's not widely known.

which brings me to this story: when i bought my copy of win 7 my mom was with me and she was hounding me to install it on her computers. i told her that was not allowed but she did not understand. i am giving her the old PC and she doesn't understand why i won't let her use it until she buys a new copy of win 7 ultimate for the license. and i wouldn't exactly call her a pirate since she buys ever game or program or media she uses even when there's free legal alternatives.

but your points do relate to the article in a way which i can't define well. are the points you bring up still fair when applied to this easier to install program? does the fact that the program apparently bypasses the xp to 7 upgrade lock out? the fact that a upgrade license requires a valid previous version license and not to run both concurrently?

and do you register new licenses for each of your ubuntu installs? do you pay for support on one install license but use the support for all your installs? are these scenarios covered under ubuntu license? is there was a to uninstall or transfer a license to a new or old installation in ubuntu?

the fact of the matter is that while i'm aware of some of the nuances of this issue, most people even fairly saavy users are not. it's similar to the people making hackinstoshes breaking copyright law and the EULA because you are not allowed to clean install OSX yourself, besides the fact that there is no means to do so that is sold or distributed by apple. it would also be like using one of their service pack(?) discs that you have to buy on multiple computers.

btw i should note that the method for activating win 7 on a new pc after an install on and old pc or after changing internal hardware such a motherboard which strangely requires reactivation was posted clearly in the microsoft help forums. i came across several related questions/posts on this issue and the answer was uniform, use the call in method and state you only have one active installation after entering the code.

I agree with you that Microsoft could make a lot of things a heck of a lot easier. I do agree that they should be more liberal when it comes to doing something "in good faith", which I do feel your story is. I could add a few more thing to your list of annoying things that Microsoft doesn't let you do as well. And I do agree with you that this product is simply making life easier for people upgrading, and using the program does indeed fall under "in good faith".

However, copyright law and Microsoft's EULAs don't give any leeway to people doing something "in good faith". The law is very clear on this: One install per computer. Remove it first (By what ever means, reformatiing, smashing your computer), then reinstall on a new PC (Only if it's FPP of course).

Regarding the OEM issue. MS are very clear on this. You are NOT allowed to install an OEM copy on a computer that you are not going to sell or give away. New egg sell them for 3 reasons: 1) System builders who sell PCs do buy parts from newegg 2) Since they are not agreeing to any MS EULA, they are not bound by it, and the first sale doctrine comes into play (i.e. they are allowed to sell it unopened) and 3) newegg don't care - they are making money from it, and until MS stops them (which they probably can't due to my 2nd point) they will keep on going

Regarding the issue regarding your family members, this is just a simple matter of ignorance in society today. Most people don't think of software as many other goods. However the reality is, is that software is protected in law, just like any other creation, and we should all respect that .

Ubuntu is released under GPL and other FOSS licences, so no registration is required. This is the joy of linux, and the main reason I use Ubuntu, is that I don't have to worry about any of the things discussed in this article. I try and respect copyright law as much as I can, and if that makes me not use Windows, then so be it.

Edited by jonnytabpni, May 26 2010, 8:56pm :

More details:
Steam have a special contract with game developers that allow you to use the game on more than one PCs. You do not have this agreement with MS with just a regular OEM or FPP license.

The "Change product key" feature of windows was designed by MS to be used for converting a pirated copy of windows into a genuine one, and can also be used by some companies with special agreements.

You can uninstall windows, it's called deleting the C:\Windows folder

MS is just worrying about flood of re-activations of such moved XP . As I remember, you cannot reactivate OEM version without a call to MS (even you only speaks with "an iron lady")

cpu said,
MS is just worrying about flood of re-activations of such moved XP . As I remember, you cannot reactivate OEM version without a call to MS (even you only speaks with "an iron lady")

Wrong. You can't reactivate OEM copies full stop. The licence is tied to the PC it was first set up on. OEM licences are not allowed to be moved. However, you may be lucky if you get a sympathetic Microsoft operator on the phone who can be convinced that it IS the same machine but you had to make wholesale changes to it.

testman said,

Wrong. You can't reactivate OEM copies full stop. The licence is tied to the PC it was first set up on. OEM licences are not allowed to be moved. However, you may be lucky if you get a sympathetic Microsoft operator on the phone who can be convinced that it IS the same machine but you had to make wholesale changes to it.

I think you'll find you're wrong. I've reactivated OEM copies before - a quick call to MS Activation Services' Robot Woman solves the problem.

*sigh* this is a worthless story. Microsoft is complaining because the majority of users are on OEM copies which can't be transferred to another machine. That does't matter if it is virtual or physical...

Frazell Thomas said,
*sigh* this is a worthless story. Microsoft is complaining because the majority of users are on OEM copies which can't be transferred to another machine. That does't matter if it is virtual or physical...

Exactly.

The problem is that OEM copies are tied to the physical hardware. Strictly speaking, you need a Software Assurance agreement to do a physical-to-virtual transfer. Even P2V on the *same* hardware is not allowed (!) unless you have SA.

Practically speaking, if you have an OEM copy of XP, you could just buy a *full* copy of Home Premium, or an *Upgrade* copy of Pro or Ultimate. Believe it or not, you would still be violating the wording of the Windows license (!). But from a moral standpoint, there is absolutely no way that Microsoft can object to what you're doing.

Microsoft Legal writes the license agreement to be so stringent that it bans things that do not deprive Microsoft of a single penny of revenue. There was the retriction on transferring full licenses of Vista between machines. There was the anti-virtualization restriction for Bitlocker. In Vista SP2, Microsoft quietly changed the wording of the license agreement so that both things became legit. (And nobody noticed -- because we were all looking forward to Windows 7 by then.)

So yeah, you probably can't do this from a legal standpoint. But as long as you buy *any* copy of Windows 7 *except* Upgrade Home Premium, you're fine from a moral standpoint.

Apparently the problem is that you can clone a system (including the license) then you can use a single license in several computers at once (piracy).

There is no possibility of a law suit, because it is the users who may violate the license agreement, by no means Parallels.

I agree with some of the guys here. This is all about support. You cannot buy Windows 7, and install it on top of Parallels, and call Microsoft if something doesn't work as it should.

Quite fair. I am sure Microsoft does not do any Quality Assurance for Windows running on Parallels.

ricknl said,
There is no possibility of a law suit, because it is the users who may violate the license agreement, by no means Parallels.

I agree with some of the guys here. This is all about support. You cannot buy Windows 7, and install it on top of Parallels, and call Microsoft if something doesn't work as it should.

Quite fair. I am sure Microsoft does not do any Quality Assurance for Windows running on Parallels.

Windows 7 is supported with virtualization technologies per the EULA. Windows XP on the other hand is not. This article is only in regards to XP which is probably why MS doesn't care to much. Worse case, they would try and go against or stop parallels in making their software as going against every user would be insane. [which is not going to happen brings them in extra money]

excerpt from EULA: Use with Virtualization Technologies. Instead of using the software directly on the licensed computer, you may install and use the software within only one virtual (or otherwise emulated) hardware system on the licensed computer. When used in a virtualized environment, content protected by digital rights management technology, BitLocker or any full volume disk drive encryption technology may not be as secure as protected content not in a virtualized environment. You should comply with all domestic and international laws that apply to such protected content.

Edited by SaltLife, May 26 2010, 2:52pm :

SaltLife said,

Windows 7 is supported with virtualization technologies per the EULA. Windows XP on the other hand is not. This article is only in regards to XP which is probably why MS doesn't care to much. Worse case, they would try and go against or stop parallels in making their software as going against every user would be insane. [which is not going to happen brings them in extra money]

excerpt from EULA: Use with Virtualization Technologies. Instead of using the software directly on the licensed computer, you may install and use the software within only one virtual (or otherwise emulated) hardware system on the licensed computer. When used in a virtualized environment, content protected by digital rights management technology, BitLocker or any full volume disk drive encryption technology may not be as secure as protected content not in a virtualized environment. You should comply with all domestic and international laws that apply to such protected content.

The specific violation here is while using a virtualized OS *concurrently* alongside another on the same machine. I don't believe your excerpt addresses that scenario.

They probably want Parallels to offer some type of compensation. Because as the article suggests, MS does gain market share with Parallels offering.

Doesn't this only affect Windows XP virtual clients? I thought that Microsoft sorted the virtualization out with Windows 7

It's Windows XP, and "free" exposure for Microsoft - two reasons why I doubt they'll make big moves on it.

Sounds like they just want to make clear that they're not going to be liable if something goes wrong with your system while using Parallels. Doesn't seem like they care too much that people are actually using it though.

spenser.d said,
Sounds like they just want to make clear that they're not going to be liable if something goes wrong with your system while using Parallels. Doesn't seem like they care too much that people are actually using it though.

Exactly.

InterceptorX said,
"Microsoft isn't trying to shut down the operation by any means."

Then why did they bother saying anything?

Who knows, an attempt to put Microsoft in a bad light?
Bottom line, Microsoft doesn't endorse it, because it won't Support users who use this method, now by Support I don't mean Microsoft hates these users, Microsoft simply won't spend time on the Phone, online figuring out why something screwed up etc

Seems reasonable to me

Til Microsoft launches a lawsuit against the creators of Parallels, this is a Non story and if they do? By all means, amend and repost

Edited by dingl_, May 26 2010, 1:05pm :

InterceptorX said,
"Microsoft isn't trying to shut down the operation by any means."

Then why did they bother saying anything?

Probably because they were asked about it.. Thus they answered..
" CNET raised the issue with both Microsoft and Parallels after learning about the product last month. " ..

InterceptorX said,
"Microsoft isn't trying to shut down the operation by any means."

Then why did they bother saying anything?

Yeah. If Microsoft had its way you would violate your license of more than one person looked at the screen at the same time, or you'd have to get a volume license for your home even if you only have one computer......

Ryoken said,
Probably because they were asked about it.. Thus they answered..
" CNET raised the issue with both Microsoft and Parallels after learning about the product last month. " ..

Whoops, good point.