The Microsoft Licensing Guide

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By Joshua Erdman
Digital Foundation, inc.

Licensing is probably the most frustrating and depressing thing to confront. Not only are the license structures complicated, but it is expensive! Sifting through all the legalese written in the End User License Agreements that would even make a lawyer scratch their head is an overwhelming task.

Today a software audit is more feared than a tax audit including horrendous penalties if you get caught. Getting on the straight and narrow in licensing might be one of the most important things you can do and hopefully this guide can help.

What is a software license?

A software license is given to you from a software company that gives you permission to use a specific software package and usually comes with many restrictions. The typical restrictions limit you to use only one copy of the software per license and prohibit you to distribute or copy the license in any way. Licenses for enterprise-class server software (such as SQL Server and Exchange Server) also require a Client Access License (CAL) as well for each user that is to access the server software.

To keep things simple, assume that you need one license for each instance of software. This also applies to software and computers in the home.

Clue: If you have 10 machines running Microsoft Office 2007 Pro, to be adequately licensed, you need 10 Microsoft Office 2007 Licenses.

Purchasing Licenses

If you find yourself short on licenses or looking to expand, there are several ways to get more licenses.

OEM Licenses

An OEM (Original Equipment Manufacturer) license is the cheapest to obtain, but you can only get them with the purchase of a new computer. When you buy a computer from a System Builder (such as Dell, HP, Gateway, etc) you are already paying for the operating system (such as Windows XP Home). By paying a little extra you can have it shipped with a copy of Microsoft Office as well.

These are called OEM Licenses and of course they come with more restrictions since they are teh cheapest. An OEM license only allows you to use the software on the specific computer it came with. In other words, when that computer is old and slow and it is time to throw it away, that license must legally be thrown away as well. That is the bad news, but the good news is that keeping track of all your licenses (at least for your desktops) is really easy and the OEM is usually responsible for technical support on the software that you bought.

Despite the ease of management, an OEM license is designed to be disposable and is not an investment. Not only that, but as you acquire new computers your network will end up being scattered with varying versions of Windows and Microsoft Office. This is typically not good for large offices trying to keep a consistent environment. Let's look at the next option.

--> Retail Licenses

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