Pros & Cons of Preloaded Software

Today's consumers are so used to receiving a new PC with Windows and Microsoft Office already installed that it is almost expected. In many cases this makes sense. But did you know Microsoft attaches some hefty limitations to preloaded software?


The two most obvious benefits of buying Microsoft software preloaded on a PC are price and convenience. Microsoft provides software to Original Equipment Manufacturers (OEMs) at a big discount over retail prices. The OEM installs Windows and Office before delivering the PC to their customer, saving the user a couple hours of time and trouble figuring out what drivers to install for which hardware and generally making the PC work properly. The user receives a PC they can turn on and use right out of the box.


In return for these benefits, Microsoft places two important limitations on preloaded software. One is that users cannot contact Microsoft for free technical support. Instead, they must contact the manufacturer of the PC (for instance, ITS).

Another potentially more important limitation is that Microsoft considers the preloaded software as part of the PC. That means it cannot be transferred to a new PC, when an old one is replaced. The software must be discarded and repurchased for the new computer, even if the old computer will no longer be used.

What happens, then, to a PC that is upgraded, not replaced? Microsoft has taken the position that all components of a PC may be upgraded except the motherboard. If a new motherboard is installed, the PC is considered "new" and the originally installed software can no longer be used. There is an exception for in-warranty repairs, but not for out-of-warranty repairs.


An organization purchasing software for several computers, or one that often upgrades and replaces PCs, should consider one of Microsoft's volume licensing options. This strategy entails purchasing five or more licenses and a CD containing the software. Since the software is not "part" of a PC, it may be removed from one PC and installed on another at will. Microsoft even lets customers mix and match products to reach the minimum number of five licenses.

As a bonus Microsoft offers several options to their licensing programs, over and above retail and OEM versions. For example, most applications such as Office can be installed on a secondary portable device for use by the same person as the primary PC. Microsoft Office has a "work at home" license available so employees can install and use Office at home if desired. Most Microsoft programs also have an option for Software Assurance, a program which essentially provides free product upgrades during the contract term. Microsoft even provides a way for businesses to pay for volume licenses over a three-year period if they enroll in Software Assurance.

Microsoft's licensing options may not make sense for everyone but in some cases it makes sense to forgo the up front discount from preloaded software for the ability to move that software to another PC later. The long term savings may pay for the extra up front expense. Fortunately ITS can help analyze these alternatives.

October 2004

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