What Microsoft won't tell you about Windows 7 licensing

What Microsoft won't tell you about Windows 7 licensing

Summary: If you're not a lawyer, the subject of Windows licensing can be overwhelmingly confusing. Over many years of studying this stuff, I have learned that Microsoft has buried much of this information in long, dry license agreements and on sites that are available only to partners. Microsoft hasn't assembled this information in one convenient place, so I decided to do the job myself, gathering details from public and private sources.


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Full and Volume Licensing

I saved the high-priced spreads for last. The full license product represents the highest price you can pay as a consumer, but it also includes the most generous license. Big customers who are willing to buy in bulk can get full-featured editions of Windows, bundled with support contracts and special benefits, by signing up for Volume License agreements. Here's how these two products work.

Retail Full Package Product (FPP) This is the most expensive retail product of all and includes the fewest restrictions of any Windows version. You can install it on any PC, new or old. You can boot from the installation media and set up Windows 7 on a PC with a squeaky clean hard drive without having to jump through a single hoop. You can install it on any Mac, in a virtual machine or using Boot Camp. You can install it in a virtual machine in Windows as well. You can even use it as an upgrade for a previous edition (although you pay more for the privilege than you need to).

Two other noteworthy benefits of an FPP copy of Windows are these:


  • You can uninstall the OS from a computer and transfer it to a new PC, something you can't do with an OEM copy of Windows. Microsoft briefly considered restricting this option when Vista was almost ready to launch but retreated in the face of a fierce backlash from customers
  • You get free technical support directly from Microsoft, rather than from the hardware maker.

FPP products are premium-priced, but for some circumstances they make sense. And for customers who are willing to pay that premium to have no license hassles whatsoever, this is the way to go

Enterprise (Volume License) This is the most misunderstood of all Windows versions, in my experience. The most common misconception is that Volume Licenses allow a large company to buy Windows in bulk copies at discounted prices and then install them on any PC in their organization. The reality is very different.

I won't even try to summarize all the details of Volume Licensing or its companion program, Software Assurance. If you want those details, you can lose yourself for days or weeks digging into the official Microsoft Volume Licensing website. You can read the dry yet oddly entertaining (in a geeky way) Emma Explains Microsoft Licensing in Depth! blog, whose proprietor, Emma Healey of Microsoft UK, also has some useful FAQs. You can even earn a Microsoft certification with a Licensing Delivery specialization, a thought that actually makes me shudder.

With those caveats out of the way, here are a few essential facts about Volume Licensing:


  • Volume Licenses are available for a long, long list of products, but for Windows 7, only Professional and Enterprise editions are available.
  • You can qualify for Volume Licensing with as few as five PCs in an organization.
  • All Volume Licenses are upgrades. You cannot legally buy a "naked" PC and attach a volume license to it. You must first buy a full license (typically an OEM license with a new PC purchase) and then use the Volume License to upgrade to the VL version you purchased.
  • Volume License keys were a source of rampant piracy in the Windows XP era. As a result, all Volume License copies of Windows 7 now have to be activated, using either a Multiple Activation Key or a Key Management Service. The big difference with the latter option (which applies to most large VL customers) is that the activation servers are managed locally by the customer and individual employees don't have to activate using Microsoft's servers.
  • According to Microsoft, a Windows Upgrade License purchased through a Volume License program is “tied” to the device to which it is first assigned and may not be reassigned. However, Volume Licensing customers who pay extra for Software Assurance coverage can reassign that coverage (which includes upgrade rights) to an appropriately licensed replacement device. If you find that confusing, join the crowd.

Disclaimer: I am not a lawyer, and this post does not represent legal advice. The information in this post comes from official Microsoft sources and represents my interpretation and belief based on my extensive experience with Windows. I believe this information to be accurate, but you should not rely on anything written here to make any buying or deployment decisions without reading the full license agreements. If you are concerned about your legal rights and responsibilities, you should consult an attorney and get any necessary legal advice for those issues.

Topics: Microsoft, Hardware, Legal, Operating Systems, Software, Windows

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  • Wow. Thanks.

    This really clears up Windows licensing for me. I had been wondering about this and everything I could find seemed to be convoluted or written in legalese. Thanks again.
    • why is this so hard?

      This is the single biggest reason to move away from Windows. This should not be this complex or need explaining. It should be immediately obvious to me a consumer or consultant what is required to be legal, I should not have to research this issue, nor wonder if I'm in compliance. Simplicity.. It should not be this much work to know what is required. When a 4 page article is the "amazingly easy" solution to understanding licensing you have a problem. Why make it this hard to buy your products?
      • Ridiculous Comment

        We are all laughing!

        Oh, you didn't mean to be funny?

        All DRM license agreements are this complex (even downloaded music) -- they just are ignored. Microsoft is serious about their product rights so people HAVE to take note.
        • olny a fool

          "only a fool makes things more complicated"

          -Albert Einstein
        • Observe: the ideal licensing representation

          I'm going to show you two pages: one that shows the
          license terms, then one that shows the End User
          License Agree. I'm not so much asking you to read the
          license, but pay attention to it's presentation.

          First page:

          Second page:

          So... so why can't all firms do something like that?
  • thanks . . .


    Sadly, the retail still seems to be a pretty stiff price.
  • RE: What Microsoft won't tell you about Windows 7 licensing

    So, if I have a Mac with retail Vista Ultimate installed
    via BootCamp can I get the upgrade version of 7? Not
    entirely clear about that.
    • Yes

      If you already have a legal copy of Vista installed on any computer (PC, Mac, virtual machine), then you can upgrade it to Windows 7.
      Ed Bott
      • As long as one installs over the top of it and doesn't try to do adual-boot


        (More reasons not to support MS anymore - one can't even do a clean install with an upgrade license without doing a lot of shouldn't-be-necessary steps. And with Microsoft freely promoting piracy in other countries, why should anyone take their anti-piracy measures even remotely seriously, especially in the real world where one BIOS upgrade or video driver upgrade triggers the activation process, like we are a bunch of criminals or something... http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/ (bottom of first page merrily reveals all:

        "Gates argued at the time that while it was terrible that people in China pirated so much software, if they were going to pirate anybody's software he'd certainly prefer it be Microsoft's.

        Today Gates openly concedes that tolerating piracy turned out to be Microsoft's best long-term strategy. That's why Windows is used on an estimated 90% of China's 120 million PCs. "It's easier for our software to compete with Linux when there's piracy than when there's not," Gates says. "Are you kidding? You can get the real thing, and you get the same price." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students."
        ) )

        Even $3 for them and $300 for us. How nice; that free market principle really being the latest "trickle-down" swindle...
        • Oh blah blah blah

          Microsoft sells a $29 copy of Windows to American students. But you are muchmore interested in FUD than facts.
          Ed Bott
          • Well, Ed, that's rude

            MS's predatory tactics are well known; facts are not FUD.
          • Ed is not interested in facts. He just shills for Microsoft. He's ignorant!

            No More Microsoft Software Ever!
          • $29?

            My bookstore sells Windows for around $100, depending on the version.
            Where can I get the $29 set?
          • For students

            Ed Bott
          • A lot of of college students are not eligible...

            You must have an Email address ending in ".edu" to qualify. A great many of colleges don't issue email addresses in the college domain. Mine doesn't.
          • A .edu address is not required

            That is the easiest way to get this offer fulfilled, but there is a specific set of procedures for qualifying if you university does not provide you wath an e-mail adress:

            Ed Bott
          • for students

            there is much better deal for windows 7 professional for $29.00 which I found at Microsoft's Ultimate steal.


            get their development software for free at

          • That's the exact same offer

            Just a different entry point and defaults to Professional instead of Home Premium.
            Ed Bott
          • FAke?

            I hate to say this, but this site looks like a fake. Or am I just too
          • Not a fake

            If you start at the link I provided, you will see that it all sponsored by Microsoft and run by third parties they contracted.
            Ed Bott