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Microsoft is sparking controversy by offering PC suppliers a bounty for turning in businesses that may have "misunderstood" their licensing agreements and requested systems sans operating systems.

The software giant says it's not out to identify customers who want to install Linux or another non-Microsoft operating systems. Rather, it wants to reach companies who believe they have a site license with Microsoft that lets them install a single copy of Windows onto multiple PCs. Microsoft says no such license exists.

So a recent letter to thousands of companies that assemble PCs for direct sale to businesses offers prizes such as games, jewelry, and furniture if they alert Microsoft about customers who want their PCs shipped "naked," without Windows.

The prize itself depends on how many "naked" PCs the customer requests, with 250 PCs worth five Microsoft games, and more than 1000 worth a Fast Cook & Grill Combo and travel chair.

Confused About Terms?

"There is a lot of confusion around our enterprise agreements," says Matt Pilla, Microsoft spokesperson. "In fact, we don't offer any enterprise agreements that cover new computers. They cover upgrades, but not new copies of the operating system," he adds.

As of Wednesday afternoon, Microsoft was unable to provide a list of companies that had received the letter. The list mostly included small system builders, but some major vendors, such as Compaq and Dell, had probably received the letter as well, Pilla says.

"We're just trying to eliminate the confusion," Pilla said. PCs shipped without an operating system installed are a headache for system builders, too, because they're unable to test the units effectively, he says.

One analyst thinks Microsoft may be getting a little ahead of itself with this strategy, though. Chris Le Tocq, principal analyst with Guernsey Research, calls the team "over enthusiastic" in its pursuit.

Licenses Tightened

However, Microsoft might not have to worry about this issue much longer, Le Tocq notes.

"They're addressing this with a number of technologies," he says. "Windows XP and Office XP both contain forced registration technologies designed to combat this kind of activity."

Volume licenses would help many of the small companies that buy PCs from system builders, Le Tocq adds.

"For a lot of organizations, the ability to clone PCs is a very useful management technique," but the Windows license doesn't permit it, he notes.

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