Newegg doesn’t open the package, so they aren’t bound by the critical terms, such as the limits on use or the need to pre-install.
Oh, and legitimate system builders building a machine for their own use would need a retail license.
I’m not sure why people are insisting there is a correct answer to this, there truly isn’t.
Here is the answer from a technical and practical standpoint:
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You can buy an OEM version of Windows 7 from various major retailers, such as Newegg or even Amazon.com.
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You can build your own PC for your own personal use and install this OEM version on your personal computer for your own personal use.
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You can activate the software, and will have a fully functioning version of Windows 7. You will be eligible to install and run any OS updates and/or Service Packs. Generally the one limitation you have with an OEM version is for future OS versions you generally can’t buy an Upgrade version of the next OS and upgrade the OEM version. Which means if you buy OEM Windows 7, then when Windows 8 (or whatever they name it) comes out, you won’t be able to buy the “cheap” Upgrade Edition, instead you’ll have to buy a full OEM version of Windows 8 or the full retail version of Windows 8.
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The vast majority of persons who buy OEM are mass manufacturers of PCs, such as HP, Dell, and other major vendors that preload to the order of millions a year. A smaller market are the niche system builders who build systems out of local computer stores or small web-order companies. Then, an even smaller market are the people who build their own PCs. People have been putting OEM versions of Microsoft software on home built PCs since the early 90 and I’m not aware of any individual home system builder who has ever suffered legally as a result of it. In the absence of any case law or any action by Microsoft vis-a-vis the license, I can’t conclude that Microsoft cares and without it being tested in a court or even in some form of legal action anyone asserting a strong factual argument about the legality is not doing some from a firm foundation.
Also, in the absence of Microsoft doing anything to prevent its third-party vendors from selling OEM versions directly to consumers, I also think it’s not evident at all Microsoft as a matter of business policy has any problem with individual consumers installing OEM versions for their own personal use.
Most likely the change in the licensing agreement was done so that no one received the impression that an OEM version of Microsoft software was intended for consumer purchase or use.
If I had to go out on a limb, I’m going to bet it isn’t about Microsoft getting the extra $70 by having individual system builders buy the full retail version. The number of individuals who build their own PCs is almost certainly less than 1% of the total market, and obviously not 100% of them are buying the OEM versions, many of them do and always have bought the retail versions.
Where this licensing agreement probably truly comes into play is it protects Microsoft. What this means is if someone inadvertently buys an OEM version and then calls for customer support, and is infuriated when they find out they are not eligible for customer support, they can’t go and sue Microsoft out of a belief that they’ve been “shafted.” Microsoft can just point the license and say “hey, our licensing agreement says you shouldn’t have been using this version in any case.”
What kind of customer support does Microsoft have? No, stop laughing, that’s a real question–my first build was a 386 machine, and I’ve never gone the retail route.
I don’t think legality is the issue here. It’s not illegal to install this on your PC in the sense that you’re violating a law that could land you in jail or subject you to government fines. And you’re not risking a criminal record.
Rather, it may be in violation of the EULA, which could potentially open you up to civil action.
As an example, it’s not illegal to copy music. It’s a violation of copyrigtht, which opens you up to legal consequences should the rights owner sue you. That’s why it’s the RIAA launching lawsuits against people who copy software; not the FBI arresting people.
One caveat: It could be illegal if it violates a law like the DMCA. But you’re not hacking the software or thwarting copy protection or encryption, so I don’t think that applies.