Microsoft Windows Licensing

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Differences Between Microsoft Windows Full Retail, Upgrade, OEM, System Builder OEM, and Volume Licensing



Windows users, no matter whether Windows 7, Windows Vista, Windows XP, Windows Server 2008 R2, Windows Server 2008 or Windows Server 2003, have probably heard of retail license, royalty OEM factory preactivated license, volume license, full packaged product, upgrade license, etc. But what exactly are the differences?

Here’s a brief explanation, and links to verify, the various licenses or licensing schemes that are currently available for Windows operating systems from Microsoft:

• Retail: Windows operating system products that are acquired through a retail store (physical or online), are individually licensed and are activated. Retail version of Windows generally can be purchased in two license pricing levels, namely Full of Upgrade license.
• Full License or FPP: The term full packaged product (FPP) refers to boxed, licensed software sold through distributors to resellers. Customers generally acquire FPPs through local retail stores and software retailers. Typically, each FPP includes one license, along with media and documentation, and is designed to meet low-volume needs. The full version of Windows has no limitation on how customers can install and use the OS, as long as each PC has its own legitimate license. Full retail can perform either clean (custom) or upgrade install, and can be transferred to entirely new systems as long as only one copy is installed at a time. The FPP license is always the most expensive edition.
• Upgrade License: Available at cheaper discounted price, upgrade license is targeted at end-users who already have a genuine license of the previous version of Windows operating system, and wish to move to a newer operating system. For example, upgrade from Windows Vista to Windows 7. Upgrade retail license can only be installed on a system that already has an OEM or full license.
• OEM: (Original Equipment Manufacturer) license is a restricted version of Windows that's included with a new computer. Manufacturers and vendors ship Windows with OEM license as it’s deeply discounted when compared with the retail copy. OEM license has the limitation that it can only perform a clean install or custom install, but not upgrade.

Since Windows Vista and including Windows 7, the EULA states that an OEM license can only be installed on one computer, and is forever locked and bounded to the computer (motherboard) on which it’s originally installed. In Windows XP, the OEM license can be installed on one computer at a time. An OEM license is always the least expensive edition, but is available only to OEMs.

OEM Licensing FAQ

• System Builder OEM: System Builder OEM license has all the same restrictions and limitations of OEM license. A system builder is anyone who assembles, reassembles, or installs software on a new or used computer system. Microsoft OEM System Builder software is designed to make it easy for system builders to acquire and distribute genuine Microsoft software with the systems they build and distribute for retail sale.

The right to distribute Microsoft OEM System Builder software is governed by the OEM System Builder license and is affixed to the side of the OEM System Builder pack. You agree to the terms and conditions of this license upon opening the pack. The license covers areas such as how the software can be distributed, how it must be supported, and placement of the Certificate of Authenticity (COA) labels. System builders can acquire OEM System Builder packs from Microsoft authorized distributors.

OEM System Builder License

Transfer of OEM Licenses

Frequently Asked Questions for OEM Resellers and System Builders

• Volume Licensing: Microsoft Volume Licensing programs serve organizations that acquire five or more licenses, but do not need multiple copies of the media and the documentation, and do not want to keep track of numerous individual license agreements. Volume Licensing offers the potential for substantial savings, ease of deployment, flexible acquisition, varied payment options, and other benefits, such as ongoing maintenance. Microsoft has Volume Licensing programs that are tailored to the specific needs of customers, based on program type, organization size, and market segment.There are actually many options and choices available for volume licensing, such as Open Value, Open Value Subscription, Open License, Select Plus, Select License, Enterprise Agreement, and Enterprise Subscription Agreement. Some editions of Windows, such as Windows 7 Enterprise, are available only through the Volume Licensing channel.

Windows with a volume license can be activated through Volume Activation models, which is through Key Management Service or KMS (locally hosted activation services preactivated with Microsoft activation service), and normally used in large corporations with a minimum activation threshold of 5 servers or 25 client computers (physical or virtual machines), and Multiple Activation Key or MAK, which is similar to a retail product key and used for one-time activation with Microsoft’s hosted activation services, independently or through a MAK proxy.

FAQs About Volume License Keys