Occasionally when upgrading Dynamics CRM 2011 to CRM 2013, you may receive a warning that "The Product Key is not compatible" in the environmental diagnostics wizard. If this happens, typicaly you can simply put the IgnoreChecks = 1 in the registry and avoid this issue.
Recently, I was working with a client and despite all my efforts of trying with a CRM 2013 MSDN key, a CRM 2013 VLK key, and the CRM 2013 trial key, I was getting the same error.
Midway through the upgrade, I received this warning:
For those of you hitting on keywords, let me give you the log entry as well.
14:26:50| Info| Executing Install action: Microsoft.Crm.Setup.Server.AddLicenseAction
14:26:51| Error| System.Exception: Action Microsoft.Crm.Setup.Server.AddLicenseAction failed. ---> Microsoft.Crm.CrmException: Cannot upgrade to specified license type.
at Microsoft.Crm.Admin.AdminService.LicenseHelper.SaveLicense(LicenseData license, Version expectedExistingBuildVersion)
at Microsoft.Crm.Setup.Server.Utility.ConfigUtility.SaveLicense(String licenseKey, Version licenseSourceVersion)
at Microsoft.Crm.Setup.Common.CrmAction.ExecuteAction(CrmAction action, IDictionary parameters, Boolean undo)
--- End of inner exception stack trace ---, Error, RetryCancel, Option1
At that point, the only option was to restore the server and databases. Fortunately, CRM was a VM and we had taken the time to snapshot as well as make the database backups.