When License Keys Cost More Than You Ever Imagined:

  Updated - September 4th, 2003

Since posting this article to the internet last week, NCC has received a large number of emails. Many of those emails attempted to explain to us the Microsoft OEM policies and practices, while almost an equal number attempted to express sympathy of our plight and/or commend our response of suggesting a Linux solution. However, in this case Microsoft is not the sole problem. It is NCC's opinion that the real issue at hand is the severe lack of support and/or timely resolution on the part of Dell. NCC appreciates each person that has taken the time to reply and/or send us an email. After waiting for more than a week, Dell finally contacted us and offered "to help". Their email to NCC is posted <here>. NCC's reply is available <here>

  August 26th, 2003

An interesting issue has occured with a client of North County Computers and we feel its NCC's duty to warn our clients of potential legal and financial issues of buying a PC from an OEM with a Windows operating system pre-installed. Our client has ordered over 200 Dell Optiplex and Dimension systems over the last three years. Financial issues have led to layoffs at the company in recent months. One of the recent layoffs included the systems administrator of the company. It was when the layoff of the sysadmin occured that NCC was brought on to support the remaining users and systems as an outsourced IT solution.

One of the tasks the prior sysadmin performed was to compile a list of all CD License Keys (serial numbers) for all company workstations. In the case of the systems purchased in the last year, this was done by simply recording the key that is on the sticker placed on the side of the system (placed there by Dell, not at the company's request). On the ex-sysadmin's last day, he posted the complete list of serial numbers on the internet, presumably as an act of bitterness at being laid off. This act was unknown to NCC and our client at the time.

In the last few weeks, recent viruses have resulted in patches needing to be applied. In a few cases, those patches caused errors that required re-installing the operating system of the workstation. Interestingly, re-installing from the original Dell installation CD now prompts for Windows Software Activation (something not normally required of pre-installed, OEM installations). Attempting to activate the product instructed us to visit http://www.microsoft.com/piracy/howtotell and stated that the product could not be activated and we needed to contact Microsoft. It was after this occured over 5 times that we started investigating the problem. Eventually we found the email of license keys in the Sent Items folder of the prior sysadmin's account showing he had mailed them out to himself and posted them to a newsgroup. Further searches for "Windows XP Professional" on http://serials.ws showed that most of our keys were publically available for download.

Our first step in resolution was to contact our Dell sales rep. He explained that he knew nothing about Microsoft's Windows Activation, nor the practice that Dell has recently adopted of putting the serial numbers on the side of the machine. He sent us to Technical Support.

After asking for a supervisor, Dell technical support stated that they do not blacklist serial numbers and that we should speak with Microsoft about the issue. When asked who thought it was a good idea to put serial numbers on a PC in view of anyone who might want to look, he responded saying "that it was probably determined by the Marketing department and that it aids users in re-installing their operating system". When I stated that it most definitely was not aiding us in re-installation, but actually hindering us, he re-iterated his suggestion that we contact Microsoft directly.

The following day we contacted Microsoft's piracy department. They stated that per the EULA that was agreed to, Microsoft has the right to disable any keys found to be published in the public domain and that aid in piracy of Microsoft's products. When I explained that *we* hadn't put them on the internet, but that a disgruntled employee had, the response was that the keys would remain de-activated and that we should contact Dell for new keys since Dell was responsible for generating its own OEM keys.

So back to Dell we went. I started with my sales rep and was eventually transfered to Technical Support. Technical support said we should talk to someone that deals with sofware piracy, but that Dell had no such group... that it was the responsibility of the software manufacturer to enforce their anti-piracy policies. When I asked about getting new keys, I was told to go to Microsoft as Dell doesn't de-activate keys. When I explained that I had already spoken to Microsoft and was told to contact Dell, the support rep put me on hold. Twenty minutes later, the rep said we could buy new copies of the Windows operating systems. I hung up in frustration.

Here's the twist. Last week, our client received a phone call from a representative at the BSA stating that they had been made aware of the company's use of pirated software and that a representative was scheduled to be onsite soon for a software audit.

The Distric Attorney says there is nothing we can do about the disgruntled employee's actions as there is no proof that it was he that sent the emails. The "evidence is too circumstantial". In an attempt to remove the stickers from the machines to prevent something like this from occuring again, we found the stickers are scored and designed to tear apart if removed, similar to license plate stickers. I called back to the Dell sales rep this week and asked if its possible to NOT have the stickers affixed to the side of new systems we purchase. When he finally got back to me (he had to make some inquiries), he stated that affixing the stickers is part of Dell policy to make the technical support departments' job easier and that our only solution was to purchase systems without an operating system, than purchase the operating system separately. The problem with this is that a Dell system with no operating system and Windows XP Professional purchased separately costs more than the same system with Windows XP Professional pre-installed. I explained this to the sales rep and he basically said that we don't purchase a high enough volume of systems to change Dell policy and therefore the increased cost is the consequence of our choice.

Most interestingly, Dell is not the only OEM with this practice. Checks at some of our other clients showed that systems purchased in the last six months from IBM, HP, and Gateway have their license keys affixed to the sides of the systems. This puts the keys in public view, and opens the door for any upset person or even anyone who needs a key for their home PC to write it down. As strict as Microsoft and the BSA are about software piracy, I'm perplexed that they would condone this action on the part of their OEMs.

I am still waiting on a proper resolution from either Dell or Microsoft. Should a representative from either company see this article, please feel free to contact me with the information on our "Contact Us" link above. In the meantime, North County Computers is suggesting that our clients purchase systems from OEMs that do not place license key stickers on the sides of their systems, or to buy systems capable of running the Linux operating system.