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OEM Software is heavily advertised, often in spam, at prices much cheaper than retail. The problem is that OEM software is often illegal.

I need to buy a new XP disc and license key. I see some websites sell the OEM version. What's the difference between that and a version I'd buy off the shelf? Will Microsoft let me activate an OEM license key if I'm only a consumer?

OEM stands for "Original Equipment Manufacturer", and those are the folks like Dell and HP and Sony and others who manufacture computers. OEM Software is the software that they install on your machine, or provide with the machine, when you purchase it new.

How, then, can one buy OEM Software without purchasing a machine?

That, my friend, is exactly the issue.

If you've purchased a machine lately, there's a lot of software already installed on the machine. A good manufacturer will also provide you with the CD-ROMs containing that software, so that you can re-install it should you need to reformat or otherwise repair your machine.

OEM Versions of software are provided by the software vendors, like Microsoft, to manufacturers for mass distribution on new hardware. Sometimes there's nothing different between an OEM version of Windows and its retail counterpart. More often, though, the hardware manufacturer will customize the operating system such that in installs drives for their specific hardware, displays their logo on boot, or other things relating to that specific manufacturer. OEM versions of applications, such as Microsoft Office for example, are typically pretty much identical to the box you might pick up on a store shelf.

Folks attempting to sell OEM version of software are typically sell the backup CD-ROMs that came with machines they've purchased. They've backed up their machine in some other way, or perhaps duplicated the CDs for their own use, and are taking the "official" OEM CDs and offering them for sale.

"Folks attempting to sell OEM version of software are typically sell the backup CD-ROMs that came with machines they've purchased."

The problem is simple: OEM software almost always includes licensing language along these lines: "For distribution with a new personal computer only. This software may not be sold independently."

Pretty clear, eh? Reselling the software that came with your computer is a violation of the software vendor's terms. In other words, it's illegal.

Another potential problem is that what's advertised as OEM software isn't that at all - it's simply illegal pirated copies of the software. The OEM term is used simply to attempt to "legitimize" the deeply discounted price.

Now, unless you yourself are building a business attempting to sell OEM software illegally, you're probably not going to get a visit from the police about this. But you could run into some very serious issues down the road. Specifically: you may not be able to update your software.

Microsoft, in particular, has been slowly ramping up their enforcement of software legitimacy. That means that if the software you're running is determined to be an OEM version that's been compromised and purchased illegally (typically determined by the product key being used by many more people than there were machines shipped with that key), you may be denied product updates, including serious security patches, until you legalize your copy. (Which is typically as simple as purchasing a retail copy and installing that on top of your existing copy.)

So my advice is simple: buy retail. Definitely go bargain hunting, but as soon as you see "OEM", run away. Buy from a legitimate retailer instead.

Article C2692 - June 17, 2006 « »

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Leo Leo A. Notenboom has been playing with computers since he was required to take a programming class in 1976. An 18 year career as a programmer at Microsoft soon followed. After "retiring" in 2001, Leo started Ask Leo! in 2003 as a place for answers to common computer and technical questions. More about Leo.

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30 Comments
Dan
June 17, 2006 11:52 PM

Great explanation! Thanks for the quick answer. :)

Ryan
June 18, 2006 9:56 AM

It may not be legal for a person to sell it, but it's perfectly legal to buy the software from a retailer if you meet the requirements of the EULA. You can legally and easily buy OEM copies of Windows from stores like Newegg or ZipZoomFly if you are also buying parts for a new computer.

And no manufacturer gives you the Windows disk anymore; often, if you get disks at all, it's an image that you have to restore. Most likely it's a partition on your hard drive with the same image.

Making blanket statements that buying OEM software is illegal is misleading, if not false. It's perfectly safe to buy OEM software as long as you follow the rules for buying online; buy from a reprutable retailer and, if it sounds too good to be true, it probably is.

Greg Bulmash
June 18, 2006 7:24 PM

When Leo warns against deals that sound too good to be true, he's not kidding. And to be honest, when the deals are that sweet, you HAVE to suspect something is shady.

My point of view, if you're not going to buy from a reputable vendor, you might as well just pirate it off the file sharing nets. You're pirating it either way, but at least by downloading it off a filesharing net, you're not handing money over to sleazebag criminals.

When you buy it from the questionable vendors, you're handing your money over to criminals.

Mary
June 19, 2006 1:37 PM

Just had to offer some "it happened to me" comments. I bought a computer used off of eBay. It had XP Pro w/SP2 installed. The seller also provided an OEM disc with the machine. For the first 6 months or so, everything was fine. I could get the Windows Updates, download Microsoft games, etc. Then one day the computer would not pass the validation scan. Microsoft said the Product Key was blocked because it had been reported lost, stolen or leaked.

I provided Microsoft with my eBay sales receipt and I even had the seller provide HIS sales receipt from when HE bought the computer direct from Dell. Microsoft wouldn't budge and basically accused me and the seller of being in cahoots trying to scam them. I had to buy another XP Pro install disc so I could become "legal".

Moral of the story: I have serious doubts about Microsoft's policies and procedures when it comes to really knowing if a person is using a pirated copy of XP. I'm not a lawyer but it sure seems to me if a person has an original sales receipt from a legitimate company like Dell, that should be sufficient proof that the OS was legally obtained, regardless of what might have happened with that particular Product Key once the computer left the factory.

If anyone has any comments, I'd like to hear your thoughts.

TOM
June 24, 2006 8:17 AM

There's a good definition of OEM at this site. I bought XP Pro "OEM" from this site and have had no problems with installation, registration, or updates.

http://www.edirectsoftware.com/index.php

darklighter
June 25, 2006 1:29 AM

It's just outrageous that it's possible to buy a PC with pre-installed WinXP without being able to reinstall it if it crashes at some point. When I bought my IBM laptop recently, I did not even get a recovery CD any more either.

However, there is a pretty easy and entirely legal way of creating your own XP CD-ROM from your pre-installed system.

For the German speakers among you, get yourself this article from the CT Computer Magazine:

http://www.heise.de/kiosk/archiv/ct/06/03/202/

The necessary Slipstreamer tool is available at:

http://www.wintotal.de/yad/index.php?id=3083

I'm not sure whether all this has been replicated in English somewhere, but if not, it would certainly be a good idea.

Thor
June 26, 2006 10:08 AM

On one hand, I agree that there are many dishonest people selling pirated discs as "OEM Installs" -- they should be closed down.

If *you're selling* software that *you signed an agreement to sell under certain conditions*, then *you* are responsible and should be raked over the coals if you don't do what you said in the agreement. The buyer (who doesn't know what you did/did not sign) shouldn't have to worry about that.

On the other hand...
It is a packaged good that is sold at a point of sale. EULA's and the all be damned, especially at this point (purchasing the OEM version) you haven't used it. There should be no legal way to get around the first sale doctrine, unless you have *explicitly* signed that right away (and by explicit, I mean that you have Gates' signature and yours on the same piece of paper). These EULAs have the same weight with me as the "this poduct cannot be returned" that you sometimes see on lawnmowers (err... Wal*mart will take it back -- if you don't like it, don't sell such a crappy product).


That said, there is one thing that may/may not be good about the retail edition:
Typically OEM software comes with no support thru the mfr(ie, if you have a problem with MS Windows on a Dell OEM license, MS will tell you to talk to Dell.)

Sometimes, the mfr's support is good. Other times....

Also... for some things (Windows), it just says that it must be purchased with hardware... a number of shops will let you buy it when you purchase it with a mouse (for example). Granted, if you need support, I don't think that shop will be of much help...

---
Mary: Not that you can do anything about it, but I think what you had was "enough evidence" (err... he bought it from dell, sold the machine and all the stuff to you... where's the copy?)

but, I am not a lawyer. I just think the whole "conditions after the sale" thing is bunk. And I support copyright (imagine that... it governs "rights to create copies" not anything dealing with selling the one copy).

Hannes
June 28, 2006 2:15 PM

It's just outrageous that it's possible to buy a PC with pre-installed WinXP without being able to reinstall it if it crashes at some point. When I bought my IBM laptop recently, I did not even get a recovery CD any more either.

However, there is a pretty easy and entirely legal way of creating your own XP CD-ROM from your pre-installed system.

For the German speakers among you, get yourself this article from the CT Computer Magazine:

http://www.heise.de/kiosk/archiv/ct/06/03/202/

The necessary Slipstreamer tool is available at:

http://www.wintotal.de/yad/index.php?id=3083

I'm not sure whether all this has been replicated in English somewhere, but if not, it would certainly be a good idea.

Hans
July 1, 2006 8:38 AM

It's just outrageous that it's possible to buy a PC with pre-installed WinXP
without being able to reinstall it if it crashes at some point. When I
bought my IBM laptop recently, I did not even get a recovery CD any more
either.

However, there is a pretty easy and entirely legal way of creating your own
XP CD-ROM from your pre-installed system.

For the German speakers among you, get yourself this article from the CT
Computer Magazine:

http://www.heise.de/kiosk/archiv/ct/06/03/202/

The necessary Slipstreamer tool is available at:

http://www.wintotal.de/yad/index.php?id=3083

I'm not sure whether all this has been replicated in English somewhere, but
if not, it would certainly be a good idea.

Robert Mellink
July 30, 2006 1:52 AM

Hi,
I'm buying a new PC from dell, but i want to buy a OEM version of Microsoft Office from a company i know well...
They're a offical retailer and th eOEM linces are 1 use only will there be any issues with that????

Please e-mail me on robertmellink@hotmail.com.

Thanks

Rick
September 22, 2006 1:29 PM

I have to differ with you. There are definitely legit OEM vendors out there, and the way you can tell that is simple: they will ask you to choose a small computer-related item you want with your purchase of the OEM software. They do that, with the full knowledge of the software manufacturers, so that they are not in violation of any licenses: They throw in an el cheapo mouse that can be considered "computer hardware" and everyone is happy. So yes, be cautious, but no need to freak if you need to buy cheap... just be smart about it.

Joe
September 25, 2006 11:18 AM

Microsoft changed the requirements for OEM software. It now has to be purchased with a full system, or by a system builder, and if you build your own systems, guess what MS considers you a system builder.

Per
September 29, 2006 6:14 AM

The fact that they throw in a cheap mouse with the OEM software just to make sure that they "sell it with hardware" means nothing. It's not meant to circumvent the law or any license agreement, it's meant to fool you into believing that you are doing a legit buy. You're not.

Many of the "OEM softwares" you see advertised isn't OEM at all, it's pirated. Adobe, as an example, has never even offered an OEM version of Photoshop, still you can buy it "OEM" at hundreds of sites. What does that tell you?

hmmhmhmh
October 30, 2006 8:45 PM

Uhhh.. Adobe sells OEM/customized software to MANY hardware manufacturers -- camcorders, cameras, scanners, etc. all come with Adobe/OEM software. It's clearly marked "OEM" (not for resale), and in many cases, has programming to prevent use on non-authorized hardware.

So Adobe, like every other software vendor on the planet, sells variations on their core retail-product direct to other businesses/vendors. They even sell an "academic edition" for registered student/faculty at participating colleges/universities. (The software is identical to the commercial retail version, but the end-user license agreement is of course totally different, 'confined' for academic use.)

Toey
December 11, 2006 10:44 AM

Check this out. All the big boys including BT (Dabs) are selling illegal OEM Software. Without any Hardware thrown in.
http://www.bizrate.co.uk/operatingsystems/products__keyword--oem+software.html
I got burned. Purchased Windows XP SP2 with Vista upgrade from Dabs for around £70 and it won't activate. Microsoft just say they shouldn't be doing it. Buyer beware.

rookie
July 25, 2007 4:06 AM

How can I tell if I purchased the retail version or OEM version? I'm guessing that I purchased the retail version, but now I am confused. I have installed MS Office Pro 2003 on my PC and now I want to put it on a personal pc too. Is this ok?

Archangelo
October 15, 2007 7:21 PM

The issue here is not "OEM" of itself. The deeper, underlying issue is real simple--that of "The Doctrine of First Sale". Which plainly says that the first, unrestricted sale of a patented item eliminates any cause for which relief can be granted on behalf of any patent owner in litigation proceedings. See below:

http://en.wikipedia.org/wiki/First-sale_doctrine_(patent)

In short, if I buy a car from ABC manufacturer, I can in turn sell it for whatever price I choose to whatever buyer I choose. Still more, the purchaser has done nothing illegal in buying this vehicle from me.

Legal? YES. Ethical? YOU DECIDE.

Concerning "OEM" software as such (by its most widely accepted and accurate definition), Leo is right.

Having said this (and I am NOT giving advice, here), it would be better for these wise asses to admit that they are taking advantage of the Doctrine of First Sale, than deceiving the buying public with any other perception.

Regarding the difference between "the law" and "the license agreement", any first year law student can tell you that if something isn't provided for in the law, it doesn't matter HOW much ink you waste in writing your EULA.

Rather, what is at issue is that (despite the possible illegality of a EULA)one has no protection against an elaborate--albeit illegal--EULA if, despite the illegality, they STILL agree to it. In this case, you are ethically BOUND to abide by what you agreed to.

Again, however, there is that "sticky" issue of the difference between "legal" and "ethical" and the courts generally make this distinction quite clear by siding with the "disadvantaged" end user.

Usually, the courts will say that it is of no consequence that Mrs. Bonnie Bushka agreed to the EULA, despite her enthusiastic clicking of the "I ACCEPT" button. The thinking of the law is that Mrs. Bushka is in an "unfair bargaining position" being faced with the horrible consequence of not being able to use the "industry-leading" software she purchased, while being effectively unable to find a reasonable alternative to, let's say, Adobe Photoshop.

In this instance, Mrs. Bushka was therefore (and under great duress) compelled to agree with something she would not otherwise have agreed with. Ergo, the technical "legality" of her electronically stated agreement to the EULA is overshadowed by the "unethical", unfair bargaining posture Adobe allegedly enjoys in such matters.

I own an ad agency and we deal with this type of thing every day. It is amazing what you can find out if you just READ.

Thanks and Great Topic, Leo. This is my first time in your forum and I really enjoyed the reading!

Daglow
March 19, 2008 6:46 PM

Sounds kinda tricky but if you read Micorsoft's EULA its states:
Old License--
A System Builder is anyone who builds, rebuilds, or installs software on a new or used PC. By opening this package, the System Builder accepts all the terms of this license. If you donít open the box, you can distribute it to another system builder. Be sure to read through the license before opening the box. Once the box is opened, the product cannot be returned.

New License--

By opening the package, you accept the license, which allows you to distribute the licenses inside the package with fully assembled computer systems.
A fully assembled computer system consists of at least a CPU, a motherboard, a hard drive, a power supply and a case.
By accepting the license, you agree you are a system builder which is an OEM, an assembler, refurbisher, or pre-installer of software on computer systems.
Distribution and distribute refer to the point in time when a fully assembled computer system leaves the control of the system builder.
If you do not open the package, you may deliver it to another system builder.
(http://oem.microsoft.com/downloads/licensing/Zoom1-5/ZoomInNew.html)
Hymmm, so as long as it is sealed, unused and unopened you can "deliver" it to anyone installing it on a computer in your country. Otherwise how would HP,Dell, Sony etc...get the software. Here is a fact: the serious price break for MS software is around 10k copies a year and the small system builder probably won't sell that many computers in 10 years. So When you see that copy of Vista Ultimate for 399.00 in the large retail chains and the system builder is selling it for $269.00 who do you think is making the biggest profit? Just remember OEM software has to be sealed! (like in the store)

Ricardo
May 17, 2008 10:42 AM

As for me I dealed once with 'oem' downloaded from www.oemsoftware.cn
they were not scammers so I received what expected, but I had to pay much less and I liked it but I didn`t receive any licence (

Federick
June 16, 2008 1:45 PM

Daglow, and what about http://oemsoftware.in ?
i have a good experience with this oem shop, can I trust it?

mikedamirault
October 14, 2008 12:12 AM

You really have to look for the sticker, as long as there is a sticker on the packaging, it is legal (as long as the license number on the sticker has not been used), most OEM manufacturers, like Dell, Sony Vaio, Compaq, and other computer manufacturers, put the sticker on the back/side/top of the computer, it's kind of hard to remove the sticker off the case and put it on the plastic shrinkwrap around the CD and booklet, and I think that, just like warranty stickers, there is a "VOID" adhesive layer, so as long as the sticker is on the shrinkwrap, it is a legal OEM version, I have use OEM versions of Windows on a lot of computers, 100% legal

Mike
October 27, 2008 12:23 AM

Some of the software vender's like oemsoftware.cn do not sale software but only archives versions of software. This was the same thing done 20 + years ago. The law as it was (and I haven't kept up on it) was the you could reproduce intellectual property for personal protection of your purchase. It is the product ie. Song, story, movie, software, etc. That is protected not the media. Its kind of like not having to toss out all of your movies if your dvd player dies, you just get a new one. The only problem is that if you don't have an original copy then its stealing. All of these EULA now are doing there best to get around that fact mostly due to a real problem with copyright infrengment.

Hemanth
December 3, 2008 8:57 AM

Hi,

I have a dell desktop machine that comes up with a preloaded xp.Now i want to upgrade my system(upgrade my processor,motherboard,ram), here the question can i able install the xp by using the recovery cd given by xp.will it work or not.

Most likely not. Recovery CDs are not the same as installation CDs. Depending on what or how much you are upgrading, it might not work. Contact Dell to figure out exactly what you need to do in your specific situation.
- Leo
04-Dec-2008
Obi Khan
January 5, 2009 7:35 AM

If I have an old machine that has an OEM office instalation on it (SBE 2003), would it be okay to reuse the key for this instalation on a new machine while the old machine is decommissioned completely and not used again?

I believe that strictly speaking you may not - OEM software is licsensed for the one specific machine it was delivered on. (OEM software may also not always work on other brands or models of computers than originally delivered on, but I suspect that's not the case for Office.) But check the wording of the license - it may also vary from OEM to OEM.
- Leo
06-Jan-2009

Charles Ombongi
May 7, 2009 2:35 AM

I am a software developer and I am just about to sign up a packaging and distribution agreement with some distribution company,can I distribute my software as an OEM, since there is no specific hardware accompaniment or prescription

Michael Fritz
June 29, 2009 4:41 PM

ok dude millions of people buy off newegg.com so you are definitely safe to purchase oem off there i promise but any other site except newegg.com, tigerdirect.com or compusa.com i say no so here is safe oem software: http://www.newegg.com/Store/Software.aspx?name=Software there is no way it can be pirated because it has the original manual and the disk is not blank and it says windows vista on the front printed like the retail and all updates work to so don't be afraid of oem at newegg.com

Charles Tilley
October 21, 2009 12:00 AM

I recently purchased an "OEM" Windows 2000 Professional program, sealed, with legal COA and the program runs fine. In fact the laptop that I installed it on had previously ran the program, so the seller told me to use the old COA for it, and I did. I also installed it with the new COA on this laptop, both laptops runs and updates fine. But that may not work with XP, with the validation. But even with XP, the validation tool downloads first, without your consent, but the checker, you can refuse the download and even check not to show it again.

Captainkeyboard
January 22, 2010 11:14 AM

Good article. While I don't if it cleared everything for me, it will make me more careful on buying or selling OEM software. A few years I installed a number of computers, and some program came bundled in the box. The company did not use the product, and it was not pre-loaded on the machine. I debated about selling/giving it away to charity, but wasn't sure about the legal rights to do so. Still not, but hey, if you are the least bit unsure, best not do it.

Rita Wakeman
January 24, 2010 4:01 PM

Is a Windows XP OEM bought from CompUSA (w/Windows imprints, w/product key, etc.), safe to install in a MAC Pro partitioned hard drive?

Jessie
February 7, 2010 3:57 PM

I bought a 2007 office software from NewEgg and when I loaded it on my computer it showed up when I went to use it as illegal. So looks like you can get illegal software in the least likely places. I complained but got no response. I put it on my Gateway computer. It loaded as a HP product. It was in the microsoft box and the CD was copper colored like most all of Microsofts operating systems. Go Figure!!

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