Psst! Wanna save $110 on Windows Vista SP1?

Computerworld - 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.