Software > Buying & Owning Software

A Guide to Microsoft Licensing

By Morgan Killick

This guide is intended for voluntary and community sector organisations with less than 250 PC’s and how they can get the best Microsoft Licensing deals.

How many of us know that we will never ‘own’ a piece of Microsoft software? It is of course Microsoft that own their software. All you – the prospective purchaser - may do, is buy the right (known as a licence) to install and operate it under specific conditions.

There are many licence schemes in operation and these also vary between vendors. The Knowledgebase article Making Sense of Software Licensing has more information about licensing in general, but here we examine the difference between the various software licensing schemes offered by Microsoft, highlighting which ones you may use and some of their restrictions and advantages as well as where to purchase them.

This is NOT an exhaustive study and does not cover Software Assurance. The information contained within it is accurate at the time of writing to the best of the authors knowledge. Although it can be used as a framework for decision making, further advice should be sought from a supplier before making any purchase.

VCOs & Microsoft Licence Types

The following table charts the various forms of third sector organisation and which types of licence they can buy. The columns are price-ordered from left to right with the most expensive first.

Further information about each form of licence is contained in the subsequent paragraphs.

licensing options

Organisation Type	RETAIL	OEM	SELECT AGREEMENT	OPEN AGREEMENT	CTX SCHEME	SPLA
Registered Charity	YES	Must be pre-installed by suppliers of new PC	YES	Initial order must be 1 server or 5 desktop applications	YES	Only if providing Microsoft software to 3rd parties
Non Registered Charity with a Legal Form	YES	Must be pre-installed by suppliers of new PC	YES	Initial order must be 1 server or 5 desktop applications	YES	Only if providing Microsoft software to 3rd parties
Other Non-profit organisation with a Legal Form	YES	Must be pre-installed by suppliers of new PC	YES	Initial order must be 1 server or 5 desktop applications	NO	Only if providing Microsoft software to 3rd parties
Unconstituted non-profit organisation	YES	Must be pre-installed by suppliers of new PC	If a member of NCVO	NO	NO	Only if providing Microsoft software to 3rd parties
'For Profit' Social Enterprise	YES	Must be pre-installed by suppliers of new PC	Check with reseller	Check with reseller	NO	Only if providing Microsoft software to 3rd parties

Retail Licences

• These are the 'boxed' versions of software that you can buy from a shop. They tend to be expensive but often come with installation media (CD or DVD) as well as documentation.
• Each product has different Use Rights. To find out more look at the Terms for Software Licensed from Microsoft. Office Professional 2003 (Retail) for example confers the right to install and operate the software on a PC and a second Portable device. You can also uninstall from that PC and reinstall on another one. Ownership however cannot be transferred.
• Retail versions of Microsoft software are intended primarily for individuals or very small organisations who already own a computer and are not likely to want to buy multiple copies.
• Bought from stores like PC World, Amazon
• You cannot lend, lease or hire this licence to third parties

OEM Licences

• The ‘Original Equipment Manufacturer’ licence allows a Manufacturer or Systems Integrator to pre-install your licence as part of the system you are buying. Typical examples are PC's that 'come with' Windows XP or Vista. Microsoft Office is also available as an OEM version.
• The OEM licence 'lives and dies' with the PC it is installed on. It cannot be transferred or installed elsewhere. Microsoft argue that an upgraded motherboard counts as a new PC and thus technically you would need to buy your OEM licences again if you do that!
• Microsoft's pricing policy means that you are unlikely to get Windows any cheaper than the OEM version. For other software such as Office, OEM is cheaper than Retail but more expensive (usually) than any other type of licence.
• You can only buy OEM from a company that is selling you a PC
• You cannot lend, lease or hire this licence to third parties

Select Agreement

• The Select Agreement – like the Open Agreement (below) - is a Volume Licence agreement. It grants access to discounted software for large buyers. It also grants some extended useage rights (see below). You purchase licences and media (CD's) separately. You can use the CD to install the software on as many PC's as you have licences for. No activation is required, but a product key should be provided by the supplier.
• The Select Agreement (Academic pricing band) is available to qualifying not-for-profit organisations who can buy into and install at any time as an affiliate of NCVO. There is no minimum purchase level because the purchaser is 'grouped in' with other NCVO affiliates.
• Unlike the Open Agreement, organisations cannot directly view and manage their licences, product keys and installation media as they do not have 'their own' agreement.
• Some Microsoft products may not be available under the Select Agreement.
• Product Use Rights: This licence is transferable from one computer to another as long as you uninstall the original. You can also install some applications on a home computer under Work-at-Home Rights and/or you can install a second copy on a laptop that you/your organisation owns under Portable Use Rights. See Further Help for more details.
• This form of licence is suitable for not-for-profit organisations that do not qualify for CTX and also don't meet the minimum order requirement for an Open Agreement. Also organisations with no legal entity may purchase this type of licence.
• You cannot lend, lease or hire this licence to third parties
• Buy from Education Large Account Resellers. For a list of these see Further Help.
• Microsoft Education Large Account Resellers for Select Agreement

Open Agreement

• The Open Agreement – like Select (above) - is another form of Volume License Agreement. Unlike Select, an Open Agreement is established directly between the purchasing legal entity and Microsoft. The academic pricing band that VCOs are entitled to grants significant discounts over OEM prices.
• A minimum initial order of either 1 server product or 5 desktop products apllies, but once initiated, you get your own licence and authorisation number so that subsequent purchases can be added one at a time.
• You can log into the Microsoft Licensing Portal (https://eopen.microsoft.com) to administer your licence, including viewing the licence keys, keeping tally of your licences and downloading the software itself.
• Open Agreement use rights for VCOs are effectively the same as those listed under Select Agreement (above).
• This form of licence is suitable for not-for-profit organisations that do not qualify for CTX, but do have a recognised legal form.
• You cannot lend, lease or hire this licence to third parties
• Any Authorised Education Reseller, see Microsoft Authorised Education Resellers

 

The CTX Scheme

• Microsoft operate a Software Donations Programme. These donations are currently handled by the Charity Technology Trust. Known colloquially as the 'CTX scheme', you buy from the full Microsoft catalogue at a nominal rate that no other form of licensing can match.
• Accessible by Registered Charities only.
• Can be administered through Eopen (see above).
• Product Use Rights are as per Open & Select Agreements
• If you are a Registered Charity, buying licences for your own use, this is the ideal form of licence for you. There are some caveats: unlike other licensing, there is a registration process to go through. Experience of order fulfillment varies but in some cases has been several weeks. There are restrictions on the number of products you can order, and you may only make one order per annum.
• You cannot lend, lease or hire this licence to third parties.
• You can only buy by registering and placing an order with the CTX scheme.

SPLA (Service Provider Licence Agreement)

• SPLA is a form of licensing that allows the licence-holder to provide services based on Microsoft products to third parties. SPLA is often cheaper than other types of licence and honours the organisation type of the end-user.
• Within the SPLA, you will report to your SPLA reseller on how many of each Microsoft product those third parties have used each month, and you will pay a monthly fee accordingly.
• SPLA is suitable for organisation wanting to allow other people (i.e. not your own staff, volunteers or trainees) to use computer systems involving Microsoft products.
• Take a look at the list of SPLA resellers on the Microsoft website.

Further Help

Microsoft Education Large Account Resellers (for Select Agreement)

Microsoft Authorised Education Resellers (For Open Agreement)

CTX Scheme

SPLA Resellers

Work at Home Rights for Select & Open (Academic) Licences

Product Use Rights for Volume Licence Customers (2008) Including Portable Use Rights (Word Document) [See Microsoft Product Use Rights, Product List, and Licensing Topics page to navigate to the most recent version]