Microsoft licensing is often a topic of confusion. In this article I will make sense of it by breaking it down and answering some of the most commonly asked questions.

There are three categories of Microsoft Licenses: retail, OEM, and volume licensing.

Retail Licensing:

Retail licensing, also known as boxed product, is what you'll find on the shelves at Best Buy, Staples, Office Depot, CompUSA, or any other kind of retail store. You get a box that typically contains a CD, a manual, license documents, and a registration card. This is generally intended for the consumer market and typically has the highest cost. This type of licensing can be transferred to another machine, provided that you've uninstalled it on the original machine. This kind of licensing has the strictest anti-piracy features, requiring you to register the license with Microsoft every time you install a copy or make any significant changes to your computer hardware.

OEM Licensing:

Next we have OEM licensing. Original Equipment Manufacturer, or OEM for short, can only be sold pre-installed on a new machine. Some major OEMs are Dell, Gateway, HP, and IBM. Windows XP is the best example of an OEM license you may already own. Most likely there is a sticker on the side of your PC with the Microsoft OEM Product Key. OEM licenses generally have the lowest price point, but are more restrictive because that license cannot be transferred; it lives and dies with the hardware. In other words, if you bought a new Dell with Windows XP and Office 2003, and it breaks, or you give it away, neither the Windows nor the Office license can be used on another PC.

Volume Licensing:

Last we have volume licensing. Volume licensing can only be sold by a Microsoft Certified Partner such as CCEX. To start a volume licensing agreement, you must purchase at least 5 copies of any Microsoft desktop product or one Microsoft Server product. From that point forward, you can add individual licenses as needed. Because these licenses are purchased in bulk or in volume, you typically get a large discount over retail pricing. A feature of volume licensing is that all of your licenses are listed on one licensing agreement, with copies kept at CCEX and Microsoft, making this the easiest type of license to keep track of.

A key advantage of volume licensing is software assurance. Software assurance is optional, but purchasing software assurance entitles you to any software upgrades that Microsoft releases during the two-year software assurance agreement. In other words, if you purchased Microsoft Office 2003 with software assurance today, you would be entitled to Office 2007 when it comes out next year at no additional cost.

Software assurance generally costs about 30% to 35% of the original license and lasts for exactly two years. After the two years are up, you can chose to renew the agreement for another two years, or let it lapse. This is a great way to control and predict your IT budget for licensing year after year.

2007 and 2008 are going to be huge years for Microsoft software releases. Office 2007, Windows Vista, and Windows Longhorn Server are all being released. When purchasing software today, ask us if adding software assurance makes sense for your organization. Software assurance can also be added to OEM licenses provided it is added within 90 days of the computer purchase.

Also note that many other software manufacturers, such as Veritas, McAfee, and Symantec, have similar licensing models.

By: Jeffrey Pena

Senior Network Engineer

Capitol Computer Exchange

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