What's the difference between Windows 7 retail and OEM?

License Comparison

OEM System Builder Software	Full Packaged Retail Product
Must be preinstalled on a PC and sold to another unrelated party.	Is intended to be re-sold separately from a PC for installation by the end user.
Cannot be transferred from the PC on which it is preinstalled. See details.	May be transferred with some limitations. See details.
Must be preinstalled onto a new PC using the OPK. See details.	Does not have an OEM Preinstallation Kit (OPK). Media inside the box can be used to install software onto a personal computer.
System builder that preinstalled the software must provide support for the software.	Microsoft provides support services.
License terms are granted by the system builder to the end user.	License terms are granted by Microsoft to the end user.

OEM licenses are to be installed by professional system manufacturers only. Under Microsoft's OEM License Agreement, they are not to be sold to end-users under any circumstance, and are to be preinstalled on a computer using the OEM Preinstallation Kit (OPK) before shipment to the customer, and must include at the very least the manufacturer's support contact information. They are, therefore, designed for installation only on a single computer and are not transferable, even if the original computer is no longer in use. This is not usually an issue for users who purchase new computer systems, because most pre-assembled systems ship with a preinstalled operating system. There are few circumstances where Microsoft will allow the transfer of an OEM license from one non-functioning system to another, but the OEM System Builder License Agreement (SBLA), as well as the OEM End User License Agreement (EULA) do not contain any allowance for this, so it is entirely up to Microsoft's discretion, depending on the situation

http://www.microsoft.com/oem/en/licensing/sblicensing/pages/licensing_for_hobbyists.aspx

OEM is a full version of Windows and doesn't require a previous copy of Windows, but it is meant for system builders who sell computers. If you're an end user you should buy a retail copy.

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