Dell will continue to install Windows XP on new PCs after Microsoft's June 30 retirement date by taking advantage of a little-known clause in the downgrade rights that come with Vista Ultimate and Vista Business.

"Dell has the ability to exercise 'Windows Vista downgrade rights' on your behalf in the factory if ... you'd prefer to have Windows XP Professional preinstalled on your PCs, "Dell said on its Web site.

According to Dell, it will factory install XP after June 18 when customers choose a "Vista Ultimate Bonus" or "Vista Business Bonus" option as they configure PCs. Dell will then install Windows XP on the machine, and include backup media for that OS as well as the installation disc for Windows Vista.

Although corporations that acquire Windows through volume license agreements, or who have signed up for Software Assurance, can downgrade any Windows software at any time, Microsoft has limited others' downgrade rights: only owners of a Vista Ultimate or Vista Business license may downgrade to XP, and then only to XP Professional, Professional x64 or XP Tablet PC.

Microsoft originally put the responsibility on users' shoulders for obtaining the installation media to replace Vista with XP, but last year it began allowing OEMs to include XP discs with new PCs or offer them as an after-sale option.

But although Dell's newest move is unusual, it is not an end-run around Microsoft's rules. In a document that spells out OEM options for Vista downgrades (download PDF), a FAQ section reads:

• Who can install the downgrade software or reinstall the original software?

• An OEM (when authorized by end user), or the end user.

A Microsoft spokeswoman confirmed late Friday that Dell was within its rights to factory-install XP on machines sold with a Vista Ultimate or Vista Business license.

It's standard practice for original equipment manufacturers, retailers and system builders to continue offering the previous version of Windows for a certain period of time after a new version is released," she said in an e-mail. "Dell is exercising their right to offer Windows XP as an option. Microsoft will no longer offer the media for this process after January of 2009, but an OEM can provide [XP] as long as they have stock on hand."