What is Microsoft licensing

If you have used a computer in the last 30 years you have most likely used Windows or Microsoft Suite, and know that you need to have a license to use that. However when this is looked at from a larger scale, it can become complex and a pain trying to keep track of the forms of Microsoft Licensing.

Most people are not aware of the intricacies of Microsoft licensing unless they have undergone a Microsoft audit, which is an analysis of an individual or company’s and their use of software to ensure compliance with Microsoft’s licensing agreements. You may assume that when you buy something from Microsoft, whether it is Windows itself or a product from Microsoft Office, that you have bought ownership of the product; but in reality it is more complicated than that, you have simply bought the license to use the product, not the product itself.

The different types of Microsoft Licenses

There is a large variety of licenses that you can purchase depending on your needs, that we will explain here.

Full Packaged Product (FPP)

A Full Packaged Product License, or what most people would know as a retail license, is the type of Microsoft license you would get if you went into a shop to buy Microsoft software, or purchase it online. Once you have purchased said FPP license, you do actually own it and forever. If you have bought Windows and Office for a new computer, this is the type of license you will have purchased. Under this license, these products can only be installed on one device at any one time; so you have to buy an individual FPP license for each product you want to use.

When operating a Windows Server on an FPP license, it works similarly; you buy the license and can use it on an unlimited amount of pieces of server hardware, as long as it’s one FPP key per piece of hardware.

Original Equipment Manufacturer Licenses

If you buy a traditional PC or a laptop from Currys PC World, Argos, Amazon or directly from a manufacturer such as Lenovo, HP, Dell and it comes with a version of the Windows OS installed on it and perhaps Microsoft Office as well; it will have come with an Original Equipment Manufacturer License.

These licenses are known as OEM licenses, because they are sold together with the equipment they come with and their cost is sold as part of the price of the computer.

Microsoft software purchased with an OEM license can not be used outside of the computer it was bought with or first installed on, so it is not transferable.

Volume Licensing

This is the type of license that is made for larger businesses and corporations, where they require the purchase of Microsoft software in bulk; or require the optionality that volume licensing offers.

There are two forms of Volume licenses; the standard is a lifetime purchase, but there is also a subscription model if a company thinks that it will be cheaper than paying the one off purchase for the whole organisation. The subscription license will expire and the software linked to it will become invalid unless the subscription is renewed.

To buy volume licensing for your organisation, you have to make a minimum purchase of five licenses, and can then buy additional licenses in whatever number you need once the initial five-or-more agreement is in place. These licenses can be split across the entire suite of products that Microsoft offers, so you can tailor it to your individual needs rather than buying the entire suite like you would with an FPP or OEM.

Volume licensing allows you to use the products on multiple devices. So if you have staff working from home on a laptop and a desktop at the office, which is especially relevant now with Covid19 and the possibility of future lockdowns, then you can have them use the same license at no additional cost.

This is simply an overview of each Microsoft license type, but if you want to learn more about Microsoft Licensing you can here.

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Tim Spafford

Tim is a student who works hard to get a degree in finance and build a successful career in business consulting. Being a student and living in London Tim has a real-life experience in budgeting, saving, money making, traveling and having fun.