After a campaign by users and analysts, Microsoft has partially backed down on a licensing policy that resulted in many users paying twice for its Windows operating system.
The issue concerns the practice of 're-imaging' new PCs, where the software that comes with a new PC is overwritten by a company's standard desktop, including applications and a customised Windows configuration.
According to research company Gartner, Microsoft has maintained for the past two months that the re-imaging and cloning of Windows workstations was an "advanced operating system usage right" available only at an extra cost.
Microsoft's sales force put pressure on users to purchase upgrade protection - an extra charge that would allow them to re-image computers without breaking existing contracts.
Gartner estimated that 60 per cent of Microsoft's customers with 500 users or more were affected by the issue.
In a research note, Gartner said: "Microsoft justified its view on the grounds that without an upgrade licence, which costs between $96 and $171 per workstation, enterprises are not permitted to re-image workstations using Microsoft media, even if the workstation is re-imaged with the same version level of Windows derived from the OEM [original equipment manufacturer]."
However, fierce criticism from Gartner and end users has finally forced Microsoft to back down, at least partially, and allow its Select customers to re-image at no additional fee.
Microsoft Select is a software purchasing programme aimed at companies with between 100 and 10,000 PCs, and covers Windows and various Microsoft applications.
Neil Laver, Windows 2000 product marketing manager at Microsoft, admitted that pressure from its mid-tier customers has caused the software giant to relax its re-imaging policy.
"A Select Licence will now allow customers to re-image Microsoft software but only with the same software," said Laver, adding that users should contact their reseller to clarify individual positions.
Laver said that small business users in Europe could also obtain upgrade rights under its Open Subscription Licence if they wanted to re-image, and went on to defend Microsoft's overall stance on the issue.
"OEM licences have lower rights because if you get something for low cost the terms and conditions are more restrictive. If we give away rights it can undermine customer satisfaction from those who have licences that include more support," he said.
While welcoming the change in policy, Gartner said it does not go far enough. Enterprises that have paid for upgrades purely to re-image should apply for a refund, it said.
In addition, Gartner pointed out that it was unfair that small business users, and those purchasing under Microsoft's Open agreement, still need to buy upgrades before re-imaging.
Simon Moores, chairman of the Windows Forum user group, added: "Pressure has been put on Microsoft to rationalise what's going on but not to the level where most users are particularly happy. Microsoft treats its licensing revenue in much the same way that Gordon Brown treats his fuel tax revenues."
"Microsoft is trying hard these days to show a conciliatory smile whereas Gordon Brown can only manage a sickly grimace," he added.
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