Microsoft still letting buyers still 'upgrade' to Vista without XP or 2000
Microsoft Corp. continues to give its tacit blessing for consumers to exploit a technical loophole that allows them to upgrade to Vista with Service Pack 1, even if they don't own the necessary prior editions of Windows.

The loophole, which was also present when Vista was first released last year, allows individuals undaunted by Microsoft's licensing and installation rules to save up to $110 by purchasing a DVD upgrade of Vista SP1, rather than the full retail one.

To install an upgrade version of Vista, users are supposed to have Windows 2000 or XP already running on that computer.

Experts say Microsoft is giving its quiet blessing to the loophole in order to boost interest in Vista among the tech-savvy users likely to exploit it.

"The fact that the upgrade edition will still upgrade over itself in Vista SP1 proves that Microsoft executives knowingly support the upgrade trick," said Brian Livingston, editorial director of the Windows Secrets newsletter, which confirmed the trick in an article appearing in its Thursday edition. "I think the feature was deliberately included to make it unnecessary for more advanced and price-sensitive users to ever buy the full version. There is no ethical dilemma with people using a feature that Microsoft has specifically programmed into Vista."

Last year, Microsoft maintained that this loophole violated the terms of its license agreement, though it has not publicly cracked down on users. In a carefully worded statement, it reiterated that position.

"Just because a piece of software installs on a PC, does not mean that it is properly licensed," wrote a spokeswoman in an e-mail. "The licensing states that upgrades require a fully licensed version of Windows to be eligible to use an Upgrade license. We expect our resellers to help their customers be fully licensed for the products that they want to purchase."

The trick is moot for the vast majority of PC users. Some may have already purchased and installed Vista. Others may have access to as many retail copies of XP or 2000 as they need (OEM copies that ship with a new PC cannot be transferred to other computers).

Other individuals and small businesses upgrade to Vista only when they buy a new PC. For large corporations, volume discounts for Windows obviate any cost savings from buying an upgrade version of Vista.

Microsoft has shipped more than 100 million copies of Vista, a figure that excludes corporate volume licenses of Windows). But 80% are to PC makers. Only 20% are being bought by end users, mostly hobbyists upgrading existing PCs or Intel Mac owners intent on running Vista in virtualization mode.

Vista SP1 became available via retailers such as several weeks ago. The upgrade version of Vista Home Premium SP1 costs about $130, versus $239 for the full edition, though is temporarily offering them for $90 and $205, respectively.

Similarly, Vista Business SP1 lists for $299 and $199 for full and upgrade versions, while Vista Ultimate SP1 lists for about $320 and $220.

The prices for Vista Home Premium SP1 and Vista Ultimate SP1 are already significantly cheaper than the RTM versions of Vista released a year ago. In February, Microsoft cut retail prices for Vista up to 20%.

Microsoft also said last month it would offer free technical support to any user experiencing problems with installing SP1.

SP1 includes a large number of bug fixes and performance enhancements.
Microsoft has a long history of de facto toleration of loopholes that allow determined users to get its software for less than full price. For example, many online stores sell student editions of Microsoft software to any customer with a pulse.

Scott Dunn, the writer for Windows Secrets, says "it's debatable whether a clean-install of Vista's upgrade edition -- without any prior purchase of 2000 or XP -- violates any license, but the result is clearly an installed copy of Vista that is indistinguishable from a full edition."

The process is identical to that used with the RTM version of Windows Vista. Users boot up with a Windows Vista SP1 upgrade DVD and begin the full installation process. But rather than entering the product key when prompted, they skip it and continue to do a clean install of Vista that fully wipes the hard drive. Next, they boot into the unactivated version of Vista SP1 on their hard drive. After running the setup again, users select upgrade and enter the upgrade key. This installs Vista SP1 for a second and final time.

Purists say the clean install process, besides allowing the licensing loophole, also enables the OS to run with less risk of problems under the hood.