Microsoft to profit from recycling

Under a new program announced by Microsoft, large companies that sell refurbished PCs can get a new copy of Windows XP to put on the machine, as long as they pay Microsoft again for that copy.

The initiative, which provides refurbishers with a special version of Windows XP, could help save more machines from heading to the landfill. In many cases, though, it means Microsoft will be getting paid twice for putting Windows on the same PC.

That's because, to properly resell a refurbished PC using its original copy of Windows, Microsoft requires that resellers have either the "certificate of authenticity" that came with the PC or its restore disks -- things that often get lost along the way. Businesses can also try to get a duplicate copy from the manufacturer, but that's a difficult and time-consuming process that doesn't scale well for the large refurbisher handling thousands of machines a month.

Microsoft won't say how much it is charging for the special versions of Windows XP, other than to say it is somewhat less than a computer maker would pay to put Windows on a new machine.

The company has had a smaller program that allowed refurbishers to put Windows onto machines destined for charities and educational institutions, but the new program addresses the broader market of PCs that are resold for general use.

For Microsoft, the refurbished PC market is an area worthy of more attention. The company did a study in 2004 and found that 20 million computers a year were being sold through formal refurbishment operations. The company estimates today that number has grown to 28 million, with growth in the refurbished market likely outpacing new PC sales growth.

"It's a part of the market that's been growing in both size and importance as PC specs improve and as countries tighten [their] environmental regulations," said Hani Shakeel, a senior product manager at Microsoft.

Today, rather than deal with the thorny licensing restrictions, many refurbishers just sell their PC's "naked"--that is without any operating system, leaving it up to the buyer to install Linux or a full retail copy of Windows, or perhaps go the piracy route.

Microsoft is launching the program with two large refurbished-PC sellers on board, but hopes to sign up additional North American refurbishers as well as computer makers worldwide. PC makers already have the right to sell refurbished versions of PCs they made originally, but they could use the new program to resell other brands of PCs they get through various take-back programs.