Windows licensing costs could double

Industry analyst Gartner has warned that changes to Microsoft's licensing policy will double the cost of Windows for up 60 per cent of enterprise customers.

Industry analyst Gartner has warned that changes to Microsoft's licensing policy will double the cost of Windows for up 60 per cent of enterprise customers.

The change refers to the practice of 're-imaging' new PCs, where the software that comes on a new PC is overwritten by a company's standard desktop, including applications and a customised Windows configuration.

Microsoft now says this practice requires a Windows upgrade licence, which costs between $117 and $157 per PC, even if the PC is re-imaged with exactly the same version of Windows supplied by the manufacturer.

Microsoft argues that re-imaging a PC replaces the Windows end-user licence agreement (EULA) originally supplied by the manufacturer.

Neil MacDonald, an analyst at Gartner, said he has email correspondence from Microsoft that shows the company did not previously object to this practice. "This is a new interpretation of the licensing agreements. Most resellers will not be aware this is now Microsoft's policy," he said.

He added that the software giant's previous policy was to warn customers that they would be disqualified from receiving manufacturer supplied technical support if they overwrote the Windows EULA. Microsoft is now calling its large customers to sell them the upgrade licences, and will use this issue in contract negotiations, said MacDonald.

Gartner estimates that 60 per cent of companies with more than 500 users load corporate software imagery over the top of new PCs, using products such as Symantec's Ghost. It said resellers should offer to deliver PCs with a company's chosen desktop pre-installed on top of the OEM Windows.

Purchasing a Microsoft Enterprise Agreement will also get round this problem, but is cost-effective for only the largest companies, said MacDonald.