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Microsoft warns on Windows 7 upgrade tool[5/28/2010]
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Parallels, known for using virtualization to solve consumer problems, thought it had a surefire new use for its technology.

Why not use the same approach it used to put Windows on a Mac to help ease the move from XP to Windows 7. The solution was elegant, helping users both make the move and even run older programs that weren't compatible with the new version of Windows. At first, the signs from Microsoft were encouraging; the company even invited Parallells to a Windows 7 momentum event in Paris to publicly talk about the program, Parallels Desktop Upgrade to Windows 7.

There was only one problem: the way the product works runs afoul of Microsoft's license rules, at least for most users. That's because the $50 software puts the user's old Windows XP system into a virtual machine, running alongside Windows 7, a concurrent use not allowed under most Windows licenses.

CNET raised the issue with both Microsoft and Parallels after learning about the product last month. Parallels said it is up to users to make sure they are in compliance with Redmond's terms. Microsoft, meanwhile, said it was talking with Parallels, but declined to publicly call out the company. Until now.

"Microsoft does not endorse moving the user's desktop from a physically loaded OS into a VM as a consumer solution, because the vast majority (more than 90 percent) of consumers do not license Windows under a license that would allow them to transfer Windows into a virtual machine, move Windows to a different machine, or run a secondary virtual machine that is not running XP Mode on the same machine," Microsoft's general manager, Gavriella Schuster, said in a statement to CNET. "Without these license rights, most consumers will not be properly licensing Windows when using the virtualization features of Parallels' product."

Schuster pointed out that enterprise customers with a Software Assurance contract covering Windows could properly use the software. Users who buy a full retail boxed copy of Windows (or possibly of both Windows XP and Windows 7), as opposed to the an upgrade version might also be properly licensed for the Parallels software.

For its part, Parallels continues to say it is up to users to make sure they are properly licensing Windows in conjunction with the upgrade tool.

"We require customers to verify they have the proper license," a Parallels representative said on Tuesday.

Microsoft suggested it is looking for a little more than that.

"Microsoft is working with Parallels to ensure that the Windows licensing requirements are made clear to customers in their product," Schuster said.

Despite the legal issues, Parallels' upgrade tool would appear to address an important need.

Although Windows 7 has proven popular, upgrading can be a hassle, requiring users to back up their data and programs, reinstall software, and then figure out what to do with programs that aren't compatible with the newer Windows.

A Parallels representative said on Tuesday that the product remains available for sale.

"It's out there," the representative said. "We're very excited about the product."