Microsoft's Licensing Site is the authoritative and comprehensive guide to understanding licensing of Microsoft products. Unfortunately, the licensing of commercial software is neither simple nor straightforward. There are many options, conditions and criteria that makes it a daunting task for individuals and business users to find their way through the complicated scenarios.

This document is intended to provide a broad overview of the options available today for licensing the Windows operating system, and the Office productivity suite. It does not cover every single licensing option, just the common/popular ones.

If you need assistance with Microsoft licensing for your business, please call Iomnis.

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Individual  License Programs
Retail Licenses
These consist of full retail and upgrade retail products; both versions can be used to create a clean install, although the Upgrade version will check for the existence of a previous, qualifying OS. When you use an upgrade license, you are not free to sell or otherwise transfer the qualifying upgrade product to anyone else. An upgrade license does not represent a separate product, rather it is a continuation of the previous license. Outside of the upgrade scenario, a Retail License is transferable to a separate machine, quite unlike the OEM License. To transfer an Upgrade Retail License, you'd have to also transfer all of the qualifying OS products tied to that license.

OEM Licenses
An OEM license is a lower cost license that is obtained when the OS is purchased in conjunction with some hardware. Typically this hardware is an entire computer, but other qualifying hardware are hard drives, CPUs, motherboards and video cards. OEM licenses come without phone support from Microsoft and can only be used for clean installations, not upgrades. Furthermore, OEM licenses are bound to the hardware they were purchased with, and cannot be transferred or resold once installed.  You cannot transfer it to another machine, and if you ever choose to obtain and install a retail Windows license on this machine, you will not be able to use the OEM license anywhere else.

Not For Resale (NFR) or Not For Distribution (NFD) License
Products bearing these licenses are usually provided free or through contests, seminars, promotions, etc. A NFR product cannot be resold, although it may be given away if it has not been opened or installed and contains all necessary licensing information along with the original packaging. A NFD product cannot be given away or sold.  This usually applies to promotional copies of Windows or Office that Microsoft makes available at seminars.


Volume  License Programs
All versions of Windows XP/2003 and Office XP licensed under a Volume Licensing program are exempt from Product Activation.  Products under a volume license are commonly referred to as Corporate Editions. Volume licenses allow qualified corporations, schools, small businesses, and other organizations to obtain OS licenses (and licenses for other Microsoft product) at a discount, and with easier tools to manage and deploy the licenses.

Open Licensing
Designed for customers (5 or more user PC's) who desire an easy, one-time transaction process with the flexibility of acquiring licenses from a broad reseller channel.
More information from Microsoft here.

Select Licensing
Designed for medium, large, and multinational organizations (250 or more user PC's) with mixed Microsoft license requirements, decentralized purchasing, and the ability to forecast purchases.
More information from Microsoft here.

Enterprise Licensing
Designed for medium, large, and multinational companies (250 or more user PC's) interested in standardizing their enterprise and who value the benefits of centralized purchasing.
More information from Microsoft here.

Enterprise Subscription Licensing
Designed for same customers as Enterprise, but for organizations that wish to acquire non-perpetual licenses for one or more of the Microsoft enterprise products on a subscription basis.
More information from Microsoft here.


Special License Programs
MSDN Subscription
There are several MSDN Subscriptions available, ranging from a few hundred dollars to several thousand dollars. This product is aimed at the development community and provides access to Software Development Kits (SDK) as well as multiple licenses of desktop and server OS's and BackOffice tools such as Exchange and SQL Server. Although multiple licenses are involved, it is still considered an individual license product and all of the licenses must be used by one individual.  MSDN software cannot be transferred or used in a production environment. The product comes with support, but only for development environments.

Academic Licensing
These differ from the other licenses in that their only distinction is licensing, not physical product. You can purchase Academic licenses of both Retail and MSDN products, and you can purchase Academic Licenses under a volume license.  Academic licenses are intended to be used in an educational environment or by those attending educational institutions, and is only valid for the time that one qualifies to be a member of the said educational facility. An Academic edition of a Microsoft product can be upgraded to a different license type at any time, and it is not different in any physical way from the non-Academic editions of the software in question.