What is a software license and what types of Microsoft licenses are there?

What is a software license?

A software license gives you the legal right to install, use, access, display, run, or otherwise interact with a specific software program. Sometimes you might need a license for each computer or device that the software is installed on. A license covers things such as downgrade rights and specifies if a license is perpetual (everlasting) or non-perpetual (temporary with a specific end date).

Learn more in our video (with subtitles in 10 languages):

For each Microsoft software program that you use, you need a license. Microsoft offers a range of licensing options to meet the different needs of customers. The terms and conditions for every licensing option vary, as does the price – both of them depend on the purchased license type.

What are the most common license types?

Each license type is suitable for different users. For example the OEM and Retail licenses are aimed at regular user, while volume licenses are best for businesses and organizations.

Quick overview of Microsoft license types

OEM

The Original Equipment Manufacturer (OEM) license. This type of license is acquired when you buy a computer, a laptop, or other device from an e-shop, a physical store, or directly from companies like HP or Dell, and it comes with an already installed operating system, Microsoft apps, or both. The price of the OS and/or app licenses is counted into the final price of your purchased electronic product.

Transferability

Transferable between machines – when you deactivate the license from one device, you can then activate it on another.

Legal note: Reselling of software licenses (including OEM) is completely legal within the European Union. “An author of software cannot oppose the resale of his ‘used’ licenses” and “even if the license agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.” according to the CJEU judgment in Case C-128/11 UsedSoft GmbH vs Oracle International Corp.

Activation of licenses

Online activation is the easiest, however, sometimes it doesn’t work for Windows and Office products. In that case, please, contact our customer support and we will help you activate the product via phone activation.

Retail / FPP

The Full Packaged Product (FPP) license, more commonly referred to as Retail license, is probably the simplest type of license. You just buy your license online, or in a store, and it’s yours forever (you may have bought Windows or Office products this way at some point). It can be installed, re-installed, or uninstalled as many times as you want, as long as you use it only on one device at any given time.

Transferability

Transferable between machines – when you deactivate the license from one device, you can then activate it on another.

Legal note: Reselling of software licenses (including OEM) is completely legal within the European Union. “An author of software cannot oppose the resale of his ‘used’ licenses” and “even if the license agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.” according to the CJEU judgment in Case C-128/11 UsedSoft GmbH vs Oracle International Corp.

Activation of licenses

Online activation is the easiest, however, sometimes it doesn’t work for Windows and Office products. In that case, please, contact our customer support and we will help you activate the product via phone activation.

Volume licensing

This type of licensing is best suited for businesses and organizations that require a purchase of high number of software licenses without the need to have accompanying physical items such as CDs or DVDs, a user’s guide, or a box. Purchasing in volume cuts the costs for these items and reduces the price per installation as the software can be used simultaneously on multiple computers within the organization. Volume licensing provides more flexibility and faster implementation, as it provides centralised management capabilities. For example, for Microsoft Volume licenses, the licenses can be installed on large amount of devices at once with the help of the Volume Activation Management Tool (VAMT). 

Transferability

Transferable between machines – when you uninstall the program on one device, you can then install it on another.

Legal note: Reselling of software licenses (including OEM) is completely legal within the European Union. “An author of software cannot oppose the resale of his ‘used’ licenses” and “even if the license agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.”

It is clear from the CJEU judgment in Case C-128/11 UsedSoft GmbH vs Oracle International Corp that the principle of ‘exhaustion’ applies to every single program that has been purchased commercially. It is irrelevant whether the individual programs are sold as part of a volume licensing agreement or not. The Higher Regional Court in Frankfurt came to the same conclusion in its verdict in December 2012. It noted that the resale of individual licenses originally purchased as part of a volume licensing agreement did not “(lead) to the assumption that this was concerned with impermissible splitting.”

Portability

Extended use rights – one user can use the software on multiple devices.

Management

• Easy management through tools such as VAMT
• Fast activation of software products on large amount of devices
• Compatible with Remote Desktop Services (RDS)

Activation of licenses

The activation of each license can be done manually online. This one-by-one activation is suitable for smaller amount of licenses as a larger amount would take too much time. For batch activation of higher number of licenses, use the platforms and tools provided by the manufacturer.

Microsoft Volume licenses

There are two different options for Volume licensing of Microsoft software:

1. Product activation with MAK (Multiple Activation Key): 
   
   Each MAK contains a specific number of device activations. The number of available activations per MAK product key can be checked with the VAMT tool – this is usually handled by an administrator of a company network.
   
   MAK licenses are best suited for companies and organizations in which devices are not re-installed often.
   
   If you purchased a MAK licensing solution from us and you find out that the number of possible remaining activations is low, contact us via and we will make sure this number is increased (by sending a special request to the software manufacturer).
2. Product activation with KMS (Key Management Services):
   
   Similar to MAK, KMS are good for a specific number of activations. The difference lies in the process of activation. You must configure a server within your corporate network with the Software Licensing Service and your KMS key. This server will communicate with the Microsoft servers to activate your products. You can then activate your devices by connecting to the KMS licensing server via your internal network.
   
   KMS activations expire after a set period of time (180 days). After that time, the client needs to reconnect to the server and reactivate the license.
   
   KMS licenses are most suitable for devices that rarely, if ever, leave the corporate network (such as devices in banks, big companies etc.).