Windows users, no matter it’s Windows 7, Windows Vista, Windows XP, Windows Server 2008 R2, Windows Server 2008 or Windows Server 2003, must have often heard of retail license, royalty OEM factory preactivated license, volume license, full packaged product (FPP), upgrade license and etc. But what’s exactly is the differences between Retail, OEM, Volume, Full or Upgrade license?

Licenses for Windows XP, Windows Vista, Windows 7, Windows Server 2003, Windows Server 2003 R2, Windows Server 2008 and Windows Server 2008 R2 can be obtained through one of three basic channels: retail, original equipment manufacturer (OEM), or Volume Licensing. The implication of different channels of license is mainly that each channel has its own unique methods of activation. The Windows XP installation CD even has different versions for each channel of distributions, even though all CDs will be used to installed to the same final product, although since Windows Vista, although the practice has since been discontinued since Windows Vista with the exception to OEM version, which may be manufacturer-specific.

Here’s a brief explanation on various licenses or licensing schemes that available for Windows operating system from Microsoft.

  • Retail: Windows operating system products that are acquired through a retail store (physical or online) are individually licensed and are activated. Retail version of Windows generally can be purchased in two license pricing levels, namely Full of Upgrade license.
    1. Full License – also known as Full Packaged Product (FPP). The full version of Windows has no limitation on how customers can install and use the OS, as long as each PC has its own legitimate license. Full retail can perform either clean (custom) and upgrade install, and can be transferred to upgraded or entirely new systems as long as only one copy is installed at a time. Full license is always the most expensive edition, and is normally purchased for computer that does not sold with Windows operating system originally.
    2. Upgrade License – available at cheaper discounted price (for example see Windows 7 prices or Windows Vista prices), upgrade license is targeted at end-users who already has a genuine license of previous version of Windows operating system, and wish to move to newer operating system. For example, upgrade from Windows Vista to Windows 7. Upgrade retail license can only be installed on a system that already has an OEM or full license.

    Retail version of Windows license includes full support from Microsoft, and each purchased copy comes with one unique product key (printed on the product packaging), which the user enters during the product installation to complete the activation online or via phone.

  • OEM: OEM (Original Equipment Manufacturer) license is a restricted version of Windows that included with a new computer. Manufacturers and vendors ship Windows with OEM license as it’s deeply discounted when compared with retail copy. OEM license has limitation that it can only perform a clean install or custom install, but not upgrade.

    Since Windows Vista and including Windows 7, EULA of OEM license can only be installed on one computer, and is forever locked and bounded to the computer (motherboard) of which it’s installed. In Windows XP, OEM license can be installed on one computer at a time. OEM license is always the least expensive edition, but is available to OEMs only.

    OEM license also has another variant called System Builder OEM license, which is also an OEM license with lesser discount, has all the same restrictions and limitations of OEM license. But System Builder OEM license may be available to general customer who purchased a new PC (or hardware) from a small system builder via retail store.

    Hardware vendors perform OEM activation by associating the operating system to the firmware (basic input/output system, or BIOS) of the computer prior to shipping new PC to customer. So no additional actions are required by the user to activate Windows, except when user choose to activate Windows with COA (Certificate of Authenticity) product key, which normally pasted on the casing of the hardware, in the case of not installing Windows with OEM provided image.

    Support for Windows with OEM license is provided by OEM or system builder, which is usually non-existent. So, end-users are virtually have to support their own.

  • Volume Licensing: Volume licenses is a software license programs (depending on the Volume Licensing program, subscriber may receive media, or has the option to acquire media or supplemental media, documentation, and product support separately as needed) that are sold in bulk to corporate customers, in quantities of five or more at a time. There are actually many options and choices available for volume licensing, such as Open Value, Open Value Subscription, Open License, Select Plus, Select License, Enterprise Agreement, and Enterprise Subscription Agreement. Some editions of Windows, such as Windows 7 Enterprise, are available only through the Volume Licensing channel.

    Again, depending on Volume Licensing programs or related entitlement customizations, Volume License may cover only upgrades to Windows client operating systems, and thus require qualifying OS licensing for each computer before upgrade rights obtained through Volume Licensing can be exercised on these computers.

    Windows with volume license can be activated through Volume Activation models, which is through Key Management Service (KMS), a locally hosted activation services preactivated with Microsoft activation service normally used in large corporations with minimum activation threshold of 5 servers or 25 client computers (physical or virtual machines), and Multiple Activation Key (MAK), which similar to retail product key and used for one-time activation with Microsoft’s hosted activation services, independently or through MAK proxy.

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