System Builders: Microsoft Makes Windows XP Downgrades Tough

At the Redmond, Wash., software giant's system builder summit last week in Phoenix, several channel executives criticized Microsoft's activation requirements, which force partners and customers to call the company to obtain a special override key to activate Windows XP on new PCs with Windows Vista pre-installed.

The intent of activation is to reduce piracy, but requiring customers and partners to call Microsoft and get a unique key to reactivate XP on every new Vista PC purchase frustrates new PC sales and hinders customer migrations to Vista, according to system builders.

Vista's general release came in late January, and the operating system now comes pre-installed on all new Windows PCs. Users can activate the new OS electronically. Typically, though, small and midsize businesses and enterprises wait several months before considering an upgrade to a new OS and tend to use the old platform until all the kinks are worked out and applications are tested.

Microsoft executives said the company is aware of the issue and is working on a solution.

Still, system builders said they're feeling the impact of the problem in the field today, and they gave Microsoft a lot of grief over the downgrade program at the summit.

"There remain more problems with the execution of Vista rather than the quality of the operating system. For instance, the Vista downgrade to XP is pretty much a joke," said one system builder, who requested anonymity. "You cannot market it with an XP system and the activation has to be done manually. What if you are a customer with a 100 desktops? You'll have to manually key something on each system."

Another system builder said the issue is a problem for Microsoft as well.

"Downgrade rights from Windows 98 or 2000 were much easier because you could install the older operating systems with any valid COA, and it would work. Obviously, this isn't the case from XP to Vista," said Todd Swank, vice president of marketing at Nor-Tech, Burnsville, Minn.

"It's a real dilemma for Microsoft. We've heard of some customers getting a new Windows XP COA number when they call the activation line, which creates problems because then customers are basically getting two licenses for the price of one," Swank said.

There is a workaround: Technicians can install XP without a new Certificate of Authenticity using a Volume License CD. Yet system builders are concerned that such a method would look shady to customers, Swank said.

Microsoft is working to resolve the complexities involved in using XP downgrade rights, said John Ball, general manager of U.S. system builders for Microsoft.

"It will be sooner rather than later," Ball said, promising a solution well before the end of the year. "Senior [Microsoft] executives have heard the feedback, and there is a lot of focus on getting this right. It's an issue globally, and we're focused on it."

One system builder in the managed services space views the situation as an opportunity to pitch services to customers. "I do handle [downgrades] for them, but I don't think it's hard. I guess system builders tend to whine a lot," said David Stinner, president of US itek Group, Buffalo, N.Y. "You can turn it around into an opportunity. We can do downgrade rights for customers, put Vista Business on it and install Windows XP Pro so they have 50 machines. And when they are ready to go to Vista, we'll upgrade them because we have the Vista keys already on it. "

Industry observers said at least some of the difficulties are getting ironed out. For example, some employees in Microsoft's global technical support team told some customers initially after Vista's release that they were not allowed to use downgrade rights to XP at all. But that was incorrect.

"Downgrade has always been a bit of a pain, especially for an operating system. You always had to have a valid CD," said Jeffrey Sherman, president of Warever Computing, Los Angeles. "However, the problem is that XP requires activation, and they won't reactivate a product key that's already been activated. However, the staff in India doesn't seem to have gotten that information, so they simply tell you that they won't activate XP."