Microsoft's limit on the number of computers eligible for free Windows 7 upgrades is "artificial" and "silly," an analyst said today, and may create just the situation the company hoped to avoid: stalled PC sales.
When Microsoft announced its Windows Upgrade Option (WUO) last Friday, it didn't publicize one restriction: Any one organization or business can obtain free upgrades to Windows 7 for only 25 Vista-equipped PCs.
Computer makers, however, made it plain that the rule was in effect.
"If you are a computer administrator ordering on behalf of your company or organization, you may order a maximum of 25 Windows 7 Upgrade Kits for 25 eligible computers purchased during the eligibility period," said the fine print in an FAQ (HP's Windows 7 upgrade options (PDF)) published by computer maker Hewlett-Packard.
"If you need more than 25 upgrade kits, contact Microsoft about a volume license."
Dell, the world's second-largest OEM, used similar language in its FAQ on the upgrade program.
"In addition, the number of Dell Windows 7 Upgrade kits allowed to any one customer is capped at 25 per physical address. Customers with more than 25 PCs are encouraged to pursue Volume Licensing," Dell stated.
"It seems like an artificial thing to do," said Gartner analyst Michael Silver today. "It just seems silly to force companies to juggle their purchasing plans for PCs."
Silver, who published a research note last Friday hammering Microsoft over the 25-PC restriction, explained today that it would either force companies to pay twice for an operating system, or prompt them to delay PC purchases until after Windows 7 officially releases.
"Even if you don't deploy Windows 7 on that machine immediately, you want that license anyway," said Silver. That applies as well to companies that are still running Windows XP by downgrading from Vista on new PCs; they'll want to have the Windows 7 license in hand for later when they do migrate.
"If you don't get [Windows 7] for free now, you'll pay $120-$150 later for a license. That's a huge percentage of the cost of the PC," Silver said.
Because of the 25-machine-per-company limit, Silver expects some organizations to defer purchasing PCs until after new machines are available with Windows 7. "That may push PC purchases into the fourth quarter," he said, noting at the same time that WUO is meant to do just the opposite.
"The program's designed so that PCs don't bottom out during the months leading to Windows 7's release," said Silver.
Two weeks ago, Silver raked Microsoft over the coals about plans to limit XP downgrades from Windows 7 to just six months after the latter's Oct. 22 release. Later that same day, Microsoft extended the time limit to 18 months.
In his research note Friday, Silver laid out Microsoft's motivation for the XP downgrade limit and the 25-PC Windows 7 upgrade restriction.
"Gartner believes that Microsoft designs these program limitations to persuade organizations to enter Enterprise Agreements, enroll licenses in Software Assurance or purchase upgrades to obtain rights to run Windows 7," he said.
To avoid paying for Software Assurance -- which Silver said can run $100 to $150 for three years -- he urged companies facing near-term PC purchases to twist some OEM arms.
"Ask your OEM to ignore the limit and give you the free upgrades," he said. Because OEMs administer WUO, they have the latitude to do that, and have made exceptions in the past, Silver said.
And if that's not possible? "Delay your purchase," he said.
Microsoft used a similar, though even more restrictive, limit three years ago when it offered free upgrades to Windows Vista.
As part of the then-named "Technical Guarantee" program, Microsoft said that no more than five upgrades would be provided per company.
"So this is actually five times better than Vista's," said Silver.
