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Used Microsoft Licenses For Sale 222

An anonymous reader writes "A secondhand dealer in Britain has been given the green light by Microsoft to resell software licenses from insolvent or downsizing companies, ZDNet is reporting. The reseller, Disclic, is legally allowed to sell the licenses at a discounted rate of between 20 percent to 50 percent, much lower than Microsoft's resellers. Partners of the software giant have expressed unhappiness over the issue as it undercuts their business. "I've never heard the like, and I am stunned," said Gordon Davies, the commercial director of Microsoft reseller Compusys. "This is clearly going to take away revenue from the channel and from Microsoft," he said."
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Used Microsoft Licenses For Sale

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  • great (Score:5, Informative)

    by scenestar ( 828656 ) on Thursday November 10, 2005 @09:57PM (#14004190) Homepage Journal
    I can't wait for the day I can buy "used" mp3s too!
  • by dada21 ( 163177 ) * <> on Thursday November 10, 2005 @09:57PM (#14004191) Homepage Journal
    The supply of these licenses is limited and must be labeled "used." Sure, CDs are CDs but it still is a different product. Competitors are free to negotiate a similar license, or even buy these cheap used copies from the reseller and resell them themselves at a tiny profit.

    This situation makes me think of the whole (wrong) idea of predatory pricing. It doesn't exist. [] In 1904, Henry Dow exported bromine to Germany, to sell at a price far below the cartels. The cartels decided to drop their price below cost to destroy Dow's business. Dow bought their sub-cost Bromine and resold it to the German market at a hefty pricing.

    This deal is good for budget-conscious consumers and will only be a blip for most resellers. There are numerous ways for them to compete. Whining to Microsoft is not an answer.
    • You might want to distinguish between the howls of complaint from any business when foreign manufacturers sell goods cheaper than the business can themselves produce and the real concept of predatory pricing.

      Predatory pricing does exist and is effective in the right circumstances to protect a monopoly and enhance profits. Thinly veiled trade protectionism also exists. Don't confuse the two - even if people sometimes try to talk about trade issues as predatory pricing.

      In particular, predatory pricing can be
    • by pavon ( 30274 ) on Thursday November 10, 2005 @10:52PM (#14004459)
      That story is cool, but it does not apply to all cases of predatory pricing. It only worked because the cartel was charging different prices in different countries. In this age, the only situations where that happens it is backed by law preventing someone like Dow from doing what he did.

      When a large company prices below the market value (be it in the world market or a walled off local market), and they have deep enough pockets to take a small loss, then there is nothing that the small companies can do about it. They can't buy up the product and resell it, as it will still be more expensive than the original. Predatory pricing does exist, and a single anicdote does not dispel that fact.
      • I'll bite. Name one case history of predatory pricing where prices were dropped by a giant company below cost, the small competitors were all run out of business, and the giant then raised prices higher than before.

        I bet you can't.
        • Standard Oil.

          Microsoft & Netscape, although IE was technically free, but since it was tied to windows and didn't run on any other platform, the true cost is difficult to determine. But the consuemr paid for it and still does.

          Recently Samsung in Korea was accused of selling memory below cost, which is apparently illegal under Korean anti-trust law. This is not a particularly good example though because they government may have thwarted the plan.

          • Nope.

            1) Standard Oil never raised prices above what they were before they started.
            2) Standard Oil dropped kerosene prices 70%, and they stayed down.
            3) During the time of the big anti-trust action against S.O., S.O. was rapidly losing market share to competitors.
            4) Standard Oil did not sell below cost.

            Most of the conventional wisdom about Standard Oil is not supported by the facts.

            IE is still free, so that example is not.
            • With standard oil, I know they would lower prices temporarily to drive local competitors out of business and then subsequently raise them again. But perhaps they didn't raise them above the original price... however when you are the only supplier, you can maintain the price, where when there is healthy competition, prices will come down. So although this may not be a pure counter example, since prices stayed the same, one could argue they were kept artificially high. It's also impossible to know what wou
        • here ya go (Score:2, Insightful)

          by Anonymous Coward
          ***mart in small town areas. Happens a lot and is quite researchable. They come in with a new store and it is tremendously cheaper than all the local mom and pops. After these stores have been driven into bankruptcy, ***mart puts their prices back up to their normal range. I have an aquaintance was in the home appliance business for 30 years that this happened to. His wholesalers, who also supply ***mart, would not sell him one single unit cheaper than what the new ***mart had them for retail. In fact, they
          • If it's so searchable, why don't you have a specific case history to post? That's why I asked. It seems everyone has heard vague, non-specific stories about this, but they always vanish like a mirage upon closer examination. Also, I didn't ask for a specific case about *dumping*. I asked for a case where dumping enabled a company to gain a monopoly in a specific market, and used that monopoly position to create a sustained price increase over what it was prior to the dumping.
  • Perfect World (Score:5, Insightful)

    by E Galois ( 857353 ) on Thursday November 10, 2005 @09:58PM (#14004195)
    In a perfect world, isn't this how it should work anyway?

    What's interesting is M$ is consenting to it???
    • What's interesting is M$ is consenting to it???

      Microsoft wants to be known as a service provider, not a product seller. You see, products can be resold but services cannot.
    • Not really ... it might just be an image thing.
    • Re:Perfect World (Score:2, Interesting)

      by jambarama ( 784670 )
      Everyone is always screaming about 'fair use' rights. They are being taken away, and we are right to kick, scream and shreik the whole way. However another branch of eroded rights are 'unregulated rights.' Fair use is a small area of rights that would otherwise be given to the copyright holder (like copying) but is given to the user under certain circumstances (like personal use).

      In the same way our unregulated rights are being lost. Reselling is an unregulated right. The fact that software compan
    • Maybe it is about accounting rules. It could be that the software can only go on the books as an asset if it can be resold.
    • What's interesting is M$ is consenting to it???

      Absolutly nothing. Microsoft doesn't care much about the lost revenue on the sale. They're looking at the big picture:

      1. More people using their software.
      2. More people getting locked in their proprietary file formats.
      3. More potential sales of full price upgrades in the future.
    • Re:Perfect World (Score:3, Interesting)

      by Sique ( 173459 )
      Microsoft probably had to consent, otherwise they would have lost in court anyway. Microsoft Germany already lost a similar case in german court, where they tried to forbid a computer store (Snogard) to buy used licenses from people who don't need them (installing from a different source for instance) and bundle them with the shop's computer offerings.

      Microsoft lost badly in court, mainly because of the First Sale doctrin (which in Germany is called Erschoepfungsgrundsatz).
      • Re:Perfect World (Score:3, Insightful)

        by Syberghost ( 10557 )
        Microsoft lost badly in court, mainly because of the First Sale doctrin (which in Germany is called Erschoepfungsgrundsatz).

        Because who could compete with a word like "Erschoepfungsgrundsatz"?
  • hey, you know (Score:5, Insightful)

    by Anonymous Coward on Thursday November 10, 2005 @09:59PM (#14004201)
    Car makers have to compete against a huge used market and still survive (well except maybe GM).
    • Re:hey, you know (Score:4, Insightful)

      by returnoftheyeti ( 678724 ) on Thursday November 10, 2005 @10:13PM (#14004282)

      A used car has a depriciation value. A used car has an unknown history, phyisical wear and tear, and could fail to function hours after you have purchased it.

      A software license has no phyisical wear and tear. It dosnt exist as a material object. All it is is a piece of paper that has to be renewed (software assurance), for a cost, in the future. The value of the license is only in how long it is good for. A used software license that is 1 year old at 10% discount is better than a used 3 day old used Lexus at a 50% discount

      • Re:hey, you know (Score:4, Insightful)

        by nolife ( 233813 ) on Thursday November 10, 2005 @10:55PM (#14004477) Homepage Journal
        Software is not depreciated by wear and tear like a car is but it definately loses value by not being cutting edge. Take something like a game. The initial price a console/PC game is roughly $50USD at release, it loses value over time and drops significantly when version 2 comes out. That software reaches a point where those that want that specific software title have already bought it. The only potential buyers now are those that are passing buy and notice the low price. It all eventually ends up in the 3 for $20 bin until the supply is exhausted or a third party company negotiates a deal to package it together with other older titles and "bonus" material with very little technical support (like the EA sports does with their 1-3 year old titles). Oh, Tiger Woods 2004? That might be fun to play and it is only $10.

        There is a big difference though in what I describe above and what this article is about. Above, EA or whoever, can control the sale and price of the older software titles to ensure it does not directly compete with their newer offerings. When they feel comfortable, they repackage, lower the price, and deal. With this article, the original company (MS) is out of the loop. We all know MS does not sell older versions of their software and obviosuly does not think they would benefit because by doing so. In fact, their license stategy is based on preventing further sales and go out of their way to prevent a secondary market.

        Back to your comment specifically though. The linked article does not state what they were actually trying to sell. What if it is W2K or maybe Office 2000? Its market value should be much lower because it is outdated and not cutting edge. I'd even say the same would apply with XP and Office 2K3 but of course they are still selling that mainstream. Maybe they need to fire up the monopoly powers and restrict the license more to prevent loop holes, the method of licensing, or release newer versions of software faster! Maybe they should start a software rental program or make the software web based so you pay every month instead of just for new versions. Oh wait..
      • A better comparison would be a software license and a car plate license.

        If you want to use the used car example, try the actual software product, which actually does have a useful lifespan (for justification see accounting rules for deprecation of software).
      • not really. software loses value as it becomes older and the rest of the world moves on to new software. while it is true that software doesn't physically degrade, it does lose value. (would you pay $150 for Windows 95?)
    • A used car, while a better deal in my opinion, is very different from a used license. It's very unlikely that your used license is going to have any hidden defects, because a license doesn't degrade, it's just a right to legally use software.
      • Buying a used car is buying someone else's problem. If you want a real value, buy last year's model when the showrooms are trying desperately to get rid of their old inventory.. late December or so. They'll often give it to you at or below cost, and you have all the peace of mind of a warranty on a brand new car without worrying about the driving or maintanance habits of a previous owner.

        Of course if you don't care at all about the quality of the vehicle, then yeah, a $500 Festiva is definately the way to
        • Personally, I've had enough problems with both new and used cars that I'll never buy a used car again.

          And that is how the auto manufacturers compete with the used market -- shorter lifespan.
    • Re:hey, you know (Score:3, Informative)

      I wouldn't necessarily say that's a good comparison. A used car is not necessarily in as good a condition as when it was brand new. Software on the other hand, whether you got it brand new from a shop or from a one of these resellers doesnt really matter. It's not as if they would be selling it with the disclaimer 'Microsoft Windows 2000, good working order except due to excessive use, Microsoft Paint no longer works and should be replaced' :)
      • ...If you're buying a "used" Win98 license (which is no longer supported, right?), then it is *DEFINITLY* not in "as good of condition" as it was "new" (unpatched vulnerabilities, no new IE for you, etc, etc). You could make the same argument for Win2000, et la if you wanted to push it (not that I'd go quite that far).

        When it gets down to it, couldn't vulnerabilities be analogous to dents and dings (or major engine trouble)? I know my Win2000 server keeps hanging on Microsoft's recent DirectX v9 patch, if

        • If you're buying a "used" Win98 license (which is no longer supported, right?), then it is *DEFINITLY* not in "as good of condition" as it was "new"

          See, the difference between software and cars is that cars start new and accumulate problems; software starts with problems and (theoretically) gets better over time.

          When it gets down to it, couldn't vulnerabilities be analogous to dents and dings (or major engine trouble)?

          Sure, if the car manufacturer sold you the car new with the dents and dings already includ
  • Great idea (Score:4, Insightful)

    by Barkley44 ( 919010 ) on Thursday November 10, 2005 @09:59PM (#14004202) Homepage
    This is a great idea, if everyone can make some money and in turn people save money form not having to buy full priced ones. Of course the resellers are worried, but there will be a limited supply, eventually companies will have to go back to them. And resellers will have the newest versions, which used licenses typically won't be for.
  • I predict . . . (Score:3, Interesting)

    by Q-Cat5 ( 664698 ) on Thursday November 10, 2005 @10:00PM (#14004210)
    . . . a revised EULA in the next Fix Pack.

    If, as TFA suggests, this is a loophole in the licensing agreements, a simple change to the already largely ignored EULA should adroitly close it.
    • As someone who just recently tried to figure out the license mess of using Remote Desktop on Win 2003, I think the expensive license mess is going to be one of the things that makes MS look like crap and Linux come out smelling like roses.

      I figure a) the biggest majority of people are in violation on their licenses for the use of software through Remote Desktop, or b) they want to stay legal but then find out how expensive everything is and don't do it at all.

      At some point, you start thinking if Linux had s
  • by ratpack91 ( 698171 ) on Thursday November 10, 2005 @10:01PM (#14004213)
    I've got a couple of used Linux licenses knocking around if anyone wants one. At $349.50 that's 50% below the retail price! Offers to
  • It's unlikely one second-hand dealer is going to change Microsofts fortunes whilst it might be beneficial to him it'd be hard to imagine enough 2nd hand licenses being found to come anywhere close to the ammount of new licenses required daily in terms of volume. "This is clearly going to take away revenue from the channel and from Microsoft," Yeah but how much? MS wouldnt've given the green light if they hadn't analyzed the situation and determined that it was very insignificant to them.
  • I wonder if... (Score:3, Insightful)

    by lxt ( 724570 ) on Thursday November 10, 2005 @10:03PM (#14004224) Journal
    ...Gordon Davies would be so "stunned" if he was a creditor owed money by a liquidated company. This is great news for creditors, because they've got more money in the pot to cover the debts owed.

    And at the same time, people get cheap software. And I don't really think this will be taking business away from Microsoft resellers - the article doesn't mention it, but I assume this second-hand software won't come with any of the additional support bundled with new programmes.
  • First Sale (Score:5, Informative)

    by arrrrg ( 902404 ) on Thursday November 10, 2005 @10:06PM (#14004246)
    From the Wikipedia article on first sale []:

    District courts in California and Texas have issued decisions applying the doctrine of first sale for bundled computer software in Softman v. Adobe (2001) and Novell, Inc. v. CPU Distrib., Inc. (2000) even if the software contains a EULA prohibiting resale.

    M$ can grumble all they want, but (at least for some of us) reselling Windows is a legal right regardless of the contents of the EULA.
    • Re:First Sale (Score:2, Informative)

      by Q-Cat5 ( 664698 )
      So does that mean that Microsoft succeeded in binding the Windows license to the physical machine?

      I know most of the hardware resellers (Dell, HP, etc.) affix the license sticker (pretty much permanently) to the case. When I asked a rep at Dell if I could take a copy of Windows 2000 Pro off of one laptop and install it on another (that had come with ME), I was told this violated the licensing agreement.

      On the other hand, I've heard that it's legal to transfer a retail copy from one machine to another s
    • They are reselling these licenses with Microsoft's blessings... they aren't grumbling.

    • Re:First Sale (Score:4, Interesting)

      by norton_I ( 64015 ) <> on Thursday November 10, 2005 @11:22PM (#14004604)
      That would probably only apply to individually licensed software, not those purchsed through volume licensing programs, which is what this is about. It is possible that you could resell or transfer your entire license block, but probably not do so per seat if it was forbidden in the license agreement.
    • by Landaras ( 159892 )
      You know the drill: IANAL, but I am a law student. Also, I view EULAs to be legal abominations that should not be enforced by state or federal courts for a number of policy reasons [].

      reselling Windows is a legal right regardless of the contents of the EULA

      No. Reselling Windows is explicitly a legal right regardless of the contents of the EULA in those jurisdictions that have ruled so. A federal district court decision is binding only in that district. A district may be anywhere from a fourth to a wh
  • Market Balance (Score:3, Insightful)

    by diakka ( 2281 ) on Thursday November 10, 2005 @10:07PM (#14004249)
    I'm glad to see this come about. So maybe this is only OK'd in the UK, but is there anything preventing American companies from purchasing licenses abroad?
  • by uberdave ( 526529 ) on Thursday November 10, 2005 @10:14PM (#14004286) Homepage
    Partners of the software giant have expressed unhappiness over the issue as it undercuts their business.

    "I don't like it because our competition is selling the product for less than we are. That will cut into our profits. How do people expect me to keep fuel in my Hummer and my Lear jet in the air? It's not fair!"
    • "I don't like it because our competition is selling the product for less than we are. That will cut into our profits. How do people expect me to keep fuel in my Hummer and my Lear jet in the air? It's not fair!"

      I don't think you understand how the Microsoft Channel Provider system works. The largest part of that channel and collectively the largest retailer of Microsoft software is the humble mom and pop store. The big sellers get huge discounts while the small shops pay something very close to retail a

  • it doesn't seem very MS like to give up possible licensing revenue.

    i see several possibilities

    1: ms thought this would end up being allowed by uk law whether they liked it or not and decided to do a deal before it wen't to court.

    2: they wanted to hurt existing resellers who were being disloyal

    3: they wanted to provide a kickback to someone.

  • by Lumpy ( 12016 ) on Thursday November 10, 2005 @10:20PM (#14004322) Homepage
    At hamfests you always could find someone with gobs of copies of just out of date and old MS apps and OS's with the magical license sticker or certificate for dirt. Hell last year at Dayton you could buy unmarked offbrand OEM XP pro licenses for $25.00 each that register just fine.

    This is simply large scale with MS's blessing. Others have been doing it anyways and telling MS to f themselves for years.

    I bought 4 copies to sell with laptops I rebuild/recondition. Microsoft would call me a pirate/evil person but I really dont give a rats ass what they think. They register, validate perfectly and have the magical feel-good sticker with install key. That's all I care about and that is also all the people I sell the laptops to care about.
  • This is old news (Score:5, Insightful)

    by Adelle ( 851961 ) on Thursday November 10, 2005 @10:27PM (#14004356)
    Software has been (legitimately and legally) bought and sold on e-bay for some time now. Does anyone think that a few more Windows 2000 users is bad news for Microsoft or its resellers? It's just another way of increasing the potential market for the next version (not counting those of us that know that newer!=better).
  • IIRC pretty much all standard M$'s EULAs are very specific about non-transferability (well, this is a standard feature in most EULAs, not just M$'s). Does this mean that they acknowledge the non-enforceability of this clause ? (I'm really curious to know, perhaps somebody with IP law background can help me).
  • Here is the link to the Disclic Ltd website...
    URL: []

    There is also a more in-depth article on the topic here:
    URL: _software/ []

  • by Anonymous Coward
    It is often said that windows' largest competitor is their older OS's. If businesses could resale their Win 2000 licenses, they might be a little more interested in upgrading to Vista.

    Furthermore, these "used" licenses would allow MS to compete with other low cost operating systems. Granted, MS would not make anything of the sale, but since they will be making mad money lute from their future subscription services, they should be able to maintain a profit...maybe
  • That's bound to be a boom. Because everybody knows, nothing holds value like an old Microsoft distribution! Yes, I'm sure IT professionals nationwide are dying to get ahold of Windows 95 disks - still loading as good as the day they were sold!
  • Vendor Lock In... (Score:2, Insightful)

    by Daniel Wood ( 531906 )
    This is just a smart tactic to create lockin and ensure future revenue.
  • "I've never heard the like, and I am stunned," said Gordon Davies, the commercial director of Microsoft reseller Compusys. "This is clearly going to take away revenue from the channel and from Microsoft," he said.

    And there you have another problem when you deal with a monopoly. We know it's bad for software, but it's also bad for business. One entity makes the rules - there is no appeal, and no other supplier if you disagree.

  • by Bulmakau ( 918237 ) on Thursday November 10, 2005 @10:48PM (#14004448)
    I totally agree that treselling used licences of MS is OK. It is logical and right. If you buy a licence for a Windows OS, no reason this licence can't be resold under the same terms...
    However, it is important to note that licence is not a simple product like a TV screen or a fruit.
    Here are three reasons:
    1. Lets say a licence was bought discounted as part of a non-profit or educational licence pack (schools, universities, organizations..). Such a licence should not be resold to a business entity or a private user.
    2. A licence bares commitments by the client, more than most products. For example, you are not allowed to share the product freely, or copy it. (maybe not only because of licencing issues but also because of such). In some cases, a licence allows the use of a product only to a specific person, or under specific terms (specific hardware, environment). For example, not allowing the use of a product by non-development personnel. Not allowing the use of a product on a multiple CPU computers, etc...
    3. Partly like #2, licencing sometimes are regional. Some people suggest that if its allowed in the UK for now, it should be open to international trade as well. Well.. not necessarily. For example, some licences are regional. Sometimes for good reason (allowing 3rd world countries the use of software that is very expensive for them if they had to buy it in other countries). OR limits of technology/security export. Sometimes cross-border trading has to be limited. That is true - noone likes to be limited, but sometimes there might be a good reason to accept such limitation

    Can't think of any other differences for now, but those two demonstrate in my opinion why there are some differences with licencing.
    With that said, reselling of a licence under the same obligations/terms as the original purchase is something I think is very right and just and should be implemented world-wide.
    Just my 2 cents.
  • Poor Davies (Score:3, Interesting)

    by shoolz ( 752000 ) on Thursday November 10, 2005 @10:52PM (#14004460) Homepage
    He's "stunned"

    Well, according to Microsoft, it's within the parameters of the license agreement and MS has OK'ed the selling. So Davies is just pissed off because somebody can undercut him. Booo hoo.
  • reality (Score:2, Informative)

    by PacketScan ( 797299 )
    "I've never heard the like, and I am stunned," said Gordon Davies, the commercial director of Microsoft reseller Compusys. "This is clearly going to take away revenue from the channel and from Microsoft," he said."
    Ok I see this taking money from the reselling partners..
    However Microsoft will be seeing $$$ signs.. Why well those extra licenses will end up on computers that likely have no more support. Therefore Microsoft stands to make a Significant amount of money at 200-250 per occurrence.
  • by Dwonis ( 52652 ) *
    'Wah! Bankruptcy auctions undercut my business!'

    WTF? Who cares?

  • For already such great price you can buy genuine high quality Microsoft software, I refuse and protest MS allowing to sell 2nd hand!!! Gees, I'd rather pay 20% MORE to stop them doing this!!!
  • ..... Ballmer throw a chair across the room. After all, much of the revenue stream of M$ is based their ability to sell new and renewal licenses. I wonder how long it will take M$ to try and kill this idea off?
  • Well hey (Score:5, Interesting)

    by Grey Ninja ( 739021 ) on Friday November 11, 2005 @01:03AM (#14005167) Homepage Journal
    I have a new laptop I bought recently that included a bundled Windows XP Home. It's a dedicated Linux box now, and I honestly have no use for Windows on the machine. Maybe sometime in the near future, I can resell the license and get my money back for something I never used?
  • ticcles!

"With molasses you catch flies, with vinegar you catch nobody." -- Baltimore City Councilman Dominic DiPietro