Microsoft Licensing – When are you legal?

Background:

Knowing when you are and aren’t legal with Microsoft products has become a large concern for businesses, no matter their size.  It isn’t a surprise, considering that Microsoft seems to change its licensing every two years or more, depending on the product and the team supporting it.  Although there are many, many different licensing modes, there are three that we will be covering in this article; OEM, Retail, and Volume licensing.

Original Equipment Manufacturer, or “OEM”, is considered to be the software that is shipped with the purchase of new equipment.  This equipment can be anything from a new computer or handheld device, to just a hard drive or system memory.  OEM licensing for Microsoft products is typically lower than Retail and Volume licensing because it is normally sold in bulk to the manufacturers of the equipment you are really purchasing.  The manufacturers pass some of this savings on to the consumer, but there is one catch.  The license of that software must stay with whatever system or hardware you purchased!  In other words, if you replace that software with something else, technically you can’t just sell it or give it away to someone else to use on another system.  OEM licensing may sometimes have minimum quantities that you must purchase, but it is very rare.

Retail licensing of Microsoft products is typically the most expensive, but also the most flexible.  If you purchase a Microsoft Retail license, you can use that software on any single machine or hardware source.  If you choose to move that license (install it somewhere else), you may do so, just as long as you remove it from the previous hardware.  This allows you to upgrade your systems or hardware as often as you need to, but still keep the existing licenses.  The additional bonus of Retail licensing is that there are no minimum quantity requirements.  If you need one, two, or three licenses, you can just purchase the quantity desired.

Volume licensing, which is typically used for medium to larger businesses, has become a lot more popular in the past few years for smaller businesses.  This is due to the wide demand of Microsoft product compatibility from larger companies and the requirement to be able to compete with competitors.  Volume licensing can greatly reduce overall software costs for volume purchases.  With Volume licensing, you must meet minimum purchases to receive price breaks.  The more you order, the better your price will be.  With Volume licensing, you are really only purchasing the licenses, which come to you in the form of paper or an email.  This is really only an activation code for the software and/or just a legal document.  You must order the ‘media’ separate, which is a nominal charge.  The media kit is usually only one or two CD’s of the software you ordered, and only requires one installation key for all the systems.  The software may be installed, re-installed or moved from system to system at any time, just as long as you use no more than number of licenses you purchased.  The major benefits of Volume licensing are flexibility and cost.  This is only of course if you can afford or need to purchase a higher volume of licenses.  Most Volume licensing starts at about 5 licenses, and after that initial purchase, some programs allow you to purchase additional licenses in single packs.  The rule of thumb though is packs of 5 or 10 licenses at a time.

Summary:

There are many other Microsoft licensing programs, which include per server, per seat, per user, per device, per processor, and one-time fees.  Please inquire about additional Microsoft licensing or pricing.

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