Keep OEM License From Physical Install when P2V'ng

Hello Experts,

I have what is hopefully an easy question but I want to be sure before I proceed.  We have a server that has SBS 2011 installed as a physical image.  We would like to P2V it into ESXI so we can spin up a VM that will run RDS.  The OS that's on is the OEM licensed image installed at the Dell factory.  If we P2V that machine to the same physical hardware its always been running on will it activate and work after the process is complete?  We plan on upgrading the RAM in the server and the HDD's to increase the storage, the processor will stay the same.  

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JohnBusiness Consultant (Owner)Commented:
I am not sure if the Server will see ESX as the same hardware even though on the same machine. I think you would have to try, and then if activation were an issue, contact Microsoft - I think they might assist you in this case.
Andrew Hancock (VMware vExpert / EE MVE^2)VMware and Virtualization ConsultantCommented:
If we P2V that machine to the same physical hardware its always been running on will it activate and work after the process is complete?

NO, P2V will break the activation because the hardware has changed. Also covered here in my EE Article, see Point 10.

HOW TO: FAQ VMware P2V Troubleshooting

and in fact you could be in breach of the OEM agreement, as licenses depending upon your country are not transferable, because you purchased it with hardware!

Once the hardware dies, so does the OS, hence why the Product Code and Key is attached to the server, also some OEM products are also BIOS LOCKED to a DELL BIOS!

So you may have two issues, Activation failure, and Product Key will not activate because you may not have a DELL BIOS!

see here

Original Equipment Manufacturers (OEM) versions

Note: Physical-to-virtual hard drive migration of a Windows installation is a valid function for customers with Software Assurance and full retail copies of Windows XP, Windows Vista, and Windows 7. Software Assurance provides users valuable benefits—please contact Microsoft Corporation for further information. Windows XP, Windows Vista and Windows 7 installed by Original Equipment Manufacturers (OEM) using OEM versions of these products may not be transferred to a virtual hard drive in accordance with Microsoft licensing terms.


there is an EE Question here, on this very subject of OEM conversions!

and two EE Articles

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☠ MASQ ☠Commented:
Q. What if I have SBS 2011 OEM Licensing, can I run this in a Virtual OSE?
A. Yes. For SBS 2011 Standard and SBS 2011 Essentials, you may run one instance of the server software in a virtual operating system environment but only on the OEM server which the SBS license is assigned. For SBS 2011 Premium Add-on, you may run one instance of the operating system in a physical or virtual machine operating system environment but only on the OEM server which the SBS license is assigned.

From Microsoft's SBS-2011 Licensing FAQ - November 2011 (attached)
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ctagleAuthor Commented:
Thank you all for the comments, I apologize for the late response, I was out for the Thanskgiving holiday.  That being said I hope you all had a wonderful turkey day!

@John Hurst - I am hoping to get an answer before I try so that everything can be done at once and so the customer knows the up front cost, but you are right and that is my last resort option at this point

@Andrew Hancock - You said that it will break the activation and possibly violate the EULA, I read the question in your article that deals with the particular situation I am faced with and it seems that if a volume or retail license is purchased for SBS then that can be used to activate the OEM image, is that correct or am I off base?

@MASQ - Your answer seems to contradict Andrew's, I read the answer in the FAQ where you got your response from and it says that I can do what I am wanting and it will activate, but since that appears to be something published by Microsoft, does that mean that it will only work on Hyper-V or will this work on ESXI as well?  If we can save several hundred dollars an not have to buy a volume/retail license it would obviously be the preferred route but I want to make sure its done right the first time and we don't activation issues down the road.
☠ MASQ ☠Commented:
I don't see my answer contradicting Andy's - (In fact he references some of my OEM stuff in there!)
The important bit is in (my) italics from Microsoft's FAQ for SBS.  You can virtualise it but only on the hardware it came with.
(Rules in countries governed by the European Court of Justice may differ over OEM regulation but this is an IT site not a legal one).
Andrew Hancock (VMware vExpert / EE MVE^2)VMware and Virtualization ConsultantCommented:
OEM software product, is an OEM software product, you may find that a volume or retail product key will not be accepted by the OEM version installed.

If you were to change the physical hardware it will require activation.

If you want this virtual version to remain as a VM on Hyper-V or ESXi (it does not matter!) installed on the same physical HOST hardware on paper you are licensed as per @MASQ response, BUT discuss with DELL, because activation breaks, as you would expect because Microsofts Activation routines detect a change of hardware, and because the fingerprint has changed, hard disk, storage controller, video controller, network interface, these are too many changes, and Activation window pops up again!

Also some advice, as I assume you will be P2Ving, and then destroying the SBS server, and installing ESXi, make sure you have THREE P2V copies....before you destroy your server, and you may want to check that this P2V copy you have BOOTs UP in VMware Workstation or VMware Player, unless you have the luxury of another ESXi server, you can P2V direct to, and then move original host.
ctagleAuthor Commented:
@MASQ - Ok I get you now.  Thank you.

@Andrew - So basically it sounds like its a risk that it won't activate, kind of like John was saying in the beginning it may or may not activate.     We are lucky enough to have a couple of servers in inventory, so I was to do this I would probably throw ESXI on one and P2V to one of those, leave the VM powered off, then transfer to the original host.  My usual process for doing P2V (when I don't have another server to use) is I will create a WSB backup in addition to the usual nightly backups, test it, then when I P2V the host OS I will make a copy of the image it creates and set that aside, then I'll start working on the file created by the P2V process.  This way I  have a backup copy of the P2V file incase it doesn't upload correctly or otherwise doesn't work after conversion, and if in a worst case scenario it simply will not work, i just blow away ESXI and restore the WSB backup and try again later.  Never actually had that last one happen but I always keep the option available.

Digressing, I appreciate everyone's help on this issue and its cleared up some things for me, I can now explain the situation and that if we move forward with this route it will be a risk.  Given what you said Andrew about OEM possibly not accepting the key, I will most likely recommend an alternative route than virtualization, if it won't accept it then that means we'll have to do a fresh install and thats a headache I don't want lol.
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