The EULA explicitly says "return it to the retailer". Dell sold the copy of Windows why should MS reimburse you directly? If they did then Dell would keep the money they received for the sale and MS would cough up the refund - that would not make any sense.
-Carol Haynes
Actually, unless they've changed the way it used to work, MS gets paid up front for the OEM licenses. They used to do a contact where the OEM had to commit to a certain number of copies of Windows, with the pricing 'tier' (i.e. unit cost/volume) determined by the quantity committed to.
The way tier pricing works is pretty straight-forward. Let's say your sales forecasters think you could conservatively sell 110K units of X annually. You'd look at the pricing breakouts and see that the makers of X have two pricing tiers: 100K units@$25/per and 50K units@$35/per
Since the "conservative" sales forecast says you'll sell 110K units at $40 each, you decide it's fairly safe to commit at the100K-units tier in order to get the lower price. So you sign the contract, start to order at $25 a license, and go on your merry way.
Most contracts will allow you to periodically (usually on the calendar quarter) 'adjust' your commitment based on your actual sales volumes. At those times you'd have the option to switch pricing tiers based on which would give you the lowest cost.
You can usually go up a tier without any penalty other than the extra cost you paid for what was sold so far. But if you decided to
drop down a tier, you'd first be required to make up the difference in price on the actual copies sold to date - and then start paying the higher price per copy on all new orders.
But here's the rub: at the end of the contract period you
owe the makers of X for the
the number of copies you committed to.
So using the previous numbers lets say you committed to 100K @ $25 and actually only sold 75K units priced @ $40.
Sales = $3,000,000 (75K*$40)
Cost = $1,875,000 (75K*$25)
Gross = $1,125,000
But now you also have to subtract an additional $625,000 from your gross profit because you still owe for the additional 25K copies (100K-75K) you committed to but didn't sell. (i.e. 25K*$25=$625,000)
So instead of making $1,125,000 - you only made $500,000. Still a decent amount of change "just" for loading something on a machine. But nowhere near as good as it would have been if you hit your sales forecast.
Missing your sales estimates by 25% just cut your gross profit
by more than half.
*Ouch*On the other hand, if you went with the 50K/$35 tier (and kept it all year) your profit would have only been $425,000. That's a cool $75,000 less!
You can play all sorts of spreadsheet forecast games, setting up formulas for when to switch pricing tiers in order to maximize return and minimize risk. Most companies do. But in the end, it's always a bit of a crap shoot. And unless you're very lucky, you almost always end up paying more than the ideal amount per license.
And with rising costs and dropping sales volumes it shouldn't surprise us that most manufacturers are reluctant to agree to do anything that hits their bottom line.
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*Note: In real life, OEM licensing arrangements take many forms. The above is a hypothetical example of how one fairly common method works. The actual terms and conditions will vary widely depending on the product and the company producing it. It's hard to do an actual example because most OEM licensing programs and price schedules are specific to each OEM and protected by non-disclosure agreements.
