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Can you help me with my software licensing question?

I think most of us have to buy Microsoft licences. I suspect all of us have got confused by Microsoft's licensing system before now - I know I have.

Can anyone explain it in straightforward terms?

I suggest making one answer for one bit (e.g. Desktop Windows; e.g. Software Assurance; e.g. SQL Server; e.g. Enterprise Agreement vs Select Agreement) and explaining that in detail so we can collect a wiki with a complete set of answers.

  • Just call Microsoft, they're more than happy to explain everything over the phone :) – saschabeaumont May 6 '09 at 1:19
  • 2
    I have a wonderful answer to this question that cannot be contained in less than 4GB of compressed text. – Adam Davis May 13 '09 at 19:43
  • @Adam yes, OK, we need an Andrew Wiles. Perhaps we should have lots of more sensibly-sized questions. – Richard Gadsden May 14 '09 at 9:23
  • This question is practically unanswerable; the conditions change frequently, and it's in Microsoft's interests that nobody is actually properly licenced, and that everyone overbuys on licences "just to be sure". – womble Jan 6 '10 at 0:14

This question is like asking a legal question on a message board -- a bad idea.

There is no simple, concise description of Microsoft licensing because there is nothing simple about it. Even with the excellent Microsoft account team that I regularly work with, they consult licensing specialists about all but most trivial issues. Small business, startup, corporate, education, k-12 education, non-profit, public sector, public sector (military), public sector (local), etc all have different rules that you won't get in a forum like this.

If you have a specific question like "What is the upside/downside to buying SA on Windows Vista?" that's fine, but "explain licensing" is asking for trouble.


This topic is lengthy and convoluted. I do not think it can be explained with "straight forward" terms, but I might be wrong. I recommend following the following links, or simply searching (insert your personal choice of search engine here) for it.

  • +1 and I agree that it's not something that can readily be explained in a Wiki, there are too many variables including size of company, commitment to MS (Open, Business, Enterprise, etc.) term of license, software covered, and day of week! (ok, kidding about day of week). Point is, want a definitive answer, go to the source, either MS or one of their top tier resellers. – WaldenL May 5 '09 at 13:36
  • Not to mention changes to licensing structures over time... – ninegrid May 6 '09 at 18:09

Here's one piece.

You can buy five basic types of licences:

  1. FPP: Full Packaged Product (cardboard box)
  2. Upgrade (again only in a box; Microsoft, confusingly, call these FPP upgrades)
  3. OEM: Original Equipment Manufacturer
  4. VL: Volume Licence
  5. VL+SA: Volume Licence with Software Assurance.

Each channel offers different licencing options; for instance the system builder channel is OEM-only; the retail channel offers only FPP and Upgrades, while all the volume channels offer only VL and VL+SA licences - some only offer VL+SA.

There used to be VUP (Version upgrade) and CUP (Competitive Upgrade) licences offered through volume channels, but not since Licensing 6 came in in 2001.


If you're buying through the volume channel, you can select between a number of different programs:

  • Open Licence
  • Open Value
  • Open Value Subscription
  • Select/Select Plus
  • Enterprise Agreement
  • Enterprise Subscription Agreement

Select and Select Plus are very similar. Many people will be on a Select Agreement already, but you can't sign new ones, it's Select Plus only for new ones, so Select will disappear when the last ones expire in five years time.

Open is a standard volume-purchase arrangement; you put in a bulk order (five or more licences) and you get a discount off the single-licence price. If you get software assurance, it runs three years from the date of purchase, and is renewable on the anniversary.

Open Value and Enterprise Agreement are similar to each other, but you need to be a much bigger organisation to sign an Enterprise Agreement (250 desk minimum). In either case you pick a standardised licence for every user from a short list of options (e.g. you can either get Core CAL Suite or Enterprise CAL Suite, but not pick and choose the individual CALs within those suites, nor have some users on one and some on the other), multiply by the total number of users in your whole organisation and then write Microsoft a large cheque each year for three years. You have to get Software Assurance; you can renew after three years and, if you do, you get a discount on the renewal compared to the original purchase.

Open Value Subscription and Enterprise Subscription Agreement are the same as OV/EA, except you pay less per year and you don't own the licences at the end of the agreement. subscriptions cost more than an SA renewal, but less than L+SA. It's a very good deal if your organisation is getting significantly smaller in the near future; some people should look at this in the present climate.

Select and Select Plus are similar to Open Licence, except they are on-going arrangements and all of your orders over a year build up to get you better bulk discount rates, whereas Open only gets you the bulk discount based on the size of the individual order. However, you need to buy a certain number of points (points being a representation of how much you spend) each year to keep your Select or Select Plus contract. Typically, you need 250+ desks for Select, but if you're buying Visual Studio for each user, then you rack up a hell of a lot of points and you wouldn't need anything like as many users. Looking at my agreement, if you have VS Team Suite for every user, then you'd be able to maintain Select with about 35 users.

There are special offers for ISVs and Microsoft Partners, though - so look out for those; I'm only describing end-user licensing.


Denny Cherry covered SQL Server licensing really well in a recent blog post.


Microsoft divide their products up into three pools: Server, Applications and Systems.

The licences work differently in each pool.

Systems pool includes only Windows Desktop Operating Systems, ie XP, Vista and Seven.

The only way to buy a "full" licence for these is either OEM or FPP. You additionally get licences to run Windows in a virtual machine hosted on a physical machine that has certain licence types (Vista/ Seven Enterprise gets you four VM licences for any edition of desktop Windows; Seven Business gets you one VM Windows XP licence)

You can get an upgrade licence through all volume licensing systems; this entitles you to upgrade one OEM machine from the OEM version of Windows to the version on the upgrade licence. You can attach Software Assurance to the upgrade licence (you can't SA an OEM licence). This is why a lot of business machines are being sold with Vista Home Basic - that's an OEM licence; the business can then apply a VL upgrade to Vista Enterprise and put their central image on.

Applications pool is Office, Visual Studio and their various sub-products.

You can buy these through any channel you like. OEM Office is tied to a physical machine, when you replace that machine, you need a new Office licence.

A VL or FPP licence for Office (and VS) entitles you to install one copy on a non-portable computer and one copy on a portable computer for the use of one person and for that person to access a copy of Office installed on a terminal server from either of their two licenced devices. You don't actually need a licence to install on a terminal server.

If the user is accessing Office via TS from another computer (e.g. from home) you can add on a WAH (work at home) licence which attaches to an existing licence to entitle them to access it from anywhere they like.

The Servers pool covers both server operating systems (Windows Server) and server applications (e.g. Exchange, SQL, ISA, etc). They are generally licenced one of two ways

  1. Server + CAL, which charges an amount for each server and then a further amount for each client that accesses the server; the CAL (Client Access licence) can be either per-user (count human beings) or per-device (count client terminals) but not both. You can generally get an External Connector (EC) licence to entitle an unlimited number of users outside of your organisation to access your systems. Note that while you only need one CAL for a user to access an unlimited number of servers, you need one EC per server.
  2. Per-processor, which charges a fixed amount for each filled processor socket in the server (multi-core processors count as one processor, not one per core).

SQL lets you choose between the two licencing systems; most other products tie you to one or the other (e.g. Exchange and Windows are Server+CAL, ISA is per-processor)

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