June 2006 / Microsoft Licensing Options Overview

Original Equipment Manufacturer (OEM)

OEM licenses are acquired when you buy a computer with software preinstalled from a system builder (such as Dell or Compaq). An OEM license only allows you to use the software on the specific computer it came with. This means that when the machine has reached the end of its useful life, the license expires with it – you cannot transfer it to another computer. Although that may be an inconvenience, it also means that keeping track of all your licenses is extremely easy since it won't move from one machine to another.

OEM licenses are typically not recommended for organizations with over 5 computers since as you acquire new computers your network may end up being scattered with varying versions of Windows and Office – making a consistent environment impossible.  

Full-Packaged Product (FPP)

FPP is boxed, shrink-wrapped software that you typically buy at retail outlets such as Staples or Best Buy. With FPP you own the license and the software and can transfer it to another machine. But you typically end up paying much more for an FPP license than you would for an OEM.  

A major downside for small businesses that purchase FPP software is the built in license protection. Since FPP software can be transferred from one computer to another, security measures are put in place to make sure that one license is not being used for two machines. This can become an administrative nightmare. Not only can switching and keeping track of all the different security codes for each machine be hassle, but if Microsoft feels that you are abusing the licensing agreement in any way, they can refuse to give you an unlock code to use the software on a new machine. In extreme cases they can even request to audit your software licenses.  

FPP licenses are typically recommended for business with less than 5 computers.  

Volume Licensing

Volume Licensing is a flexible and cost-effective way for companies to acquire and manage multiple licenses. Purchasing new licenses and tracking all current licenses can be done online – making Volume Licensing the easiest of the 3 options to administer. Microsoft provides three volume licensing options: 

Open Licensing – designed for small to mid-sized businesses that require at least 5 licenses. Open Licensing can save businesses over 20% over FPP.  

Select Licensing – designed for large businesses that require 250 or more licenses. Select licensing is designed for organizations with mixed software and acquisition requirements. 

Enterprise Licensing – like Select Licensing, Enterprise Licensing is designed for large businesses that require 250 or more licenses. It differs from Select in that it is designed for companies that want to standardize their Microsoft software throughout their organization.  

Since Open Licensing is typically the best option for small to mid-sized businesses, we’ll discuss it more detail.

Open Licensing In-Depth

In the Open License program there are 3 purchasing options to choose from. These options vary by feature, services, and requirements. The following table presents a comparison of the 3 options:

* SA stands for Software Assurance; a feature that allows you to get free upgrades to future software versions without having to buy another license. For example: you purchased bulk copies of Office XP and then Office 2003 became available. Without Software Assurance you must buy all new licenses in order to use the upgraded product. With Software Assurance you’d be automatically provided with the new version.

Open Value and Open Business are similar in the sense that they both require you to purchase just 5 licenses to join and all prices are fixed and not based on the quantity you purchased. Open Value differs from Open Business in that: 

Open Volume differs from Open Value and Open Business in that is it a point based program instead of a per-license program. Your initial purchase must consist of a minimum of 500 points. As you obtain more point you reach higher tiers; allowing you to purchase software at slightly better prices.

As you can see, you have a lot of options when it comes to choosing the best licensing for your organization. Since may be purchasing long term agreements and selecting from multiple options, you should always consult with your Value Added Reseller, such as Thrive, for recommendations. As always, ff you have any questions on licensing or IT topics in general, please feel free to Contact Me.

Sincerely,

Dylan O'Connor, MCSE, CCA
Chief Technology Officer

email: doconnor@thrivenetworks.com
phone: 978.461.3999
web: www.thrivenetworks.com