Difference Between OEM and Retail - Microsoft Licenses - 2024
Once you decide to purchase a copy of Microsoft’s Windows operating system or Microsoft Office Applications, you have to choose between two versions one is OEM (Original Equipment Manufacturer) and Second one is Retail. Both serve the purpose of activating Microsoft products, but they are intended for different use cases. The choice between them largely depends on your needs and intended use. OEM keys are tied to the first computer they are activated on and cannot be moved to another.
They are generally cheaper than Retail keys because they are intended for system builders who install the operating system on new PCs that are then sold to end-users. On the other hand, Retail licenses are sold directly to consumers, providing them with Microsoft support and the ability to transfer the license if they change or upgrade their hardware. Understanding the licensing differences is crucial for consumers as these details can significantly impact long-term usage and value.
Understanding the Key Differences Between OEM and Retail Microsoft Licenses.
When you purchasing Microsoft Windows or Microsoft Office Applications for a brand new Desktop or Laptop build or upgrading an existing system, you’ll experience two main types of Windows licenses: OEM and Retail. Understanding their differences is key to making the right choice for your needs.
What’s an OEM (Original Equipment Manufacturer) Key?
- Original Equipment Manufacturer (OEM): These keys are intended for computer manufacturers and sold pre-installed on new devices.
- Tied to Hardware: OEM keys are locked the first motherboard they’re used on, making them non-transferable.
- Cheaper Option: These are generally more affordable than retail keys.
What’s a Retail Key?
- Available to Anyone: Retail keys can be purchased directly by individuals from Microsoft or authorized resellers.
- Flexible: You can transfer a retail key to a new PC if you upgrade in the future.
- More Support: Since retail licenses are purchased through Microsoft, they get official support options.
The Cost / Price Difference:
You can expect to pay less when buying the ‘OEM’ version of Windows. Here’s an example of the cost differences in Windows 11 OEM vs. Retail versions:
Licensing Logic: What’s the difference between OEM, Retail and Volume Licenses?
When it comes to purchasing licences there are a number of different channels that you can purchase through. These are FPP (Full Packaged Product), OEM (Original Equipment Manufacturer) and Volume Licensing. So what are the key differences between the channels, and what impact do they have on your licensing rights? Because it is the usage rights you receive with the software that mainly distinguish between the channels.
FPP License
FPP license are purchased from retail and provide a quick and convenient way for customers requiring less than five licences to purchase their software. Licences sold through FPP are either full licences or upgrade licences. A full licence does not require any pre-existing versions of the software to be on the machine it is installed on, whereas an upgrade licence allow you to cost effectively upgrade to a newer version of software that you are already licensed for.
When you purchase FPP software you are entering into an agreement with Microsoft stating that you will adhere to the usage rights associated with the software. These rights include detail such as downgrade rights, which you generally do not get with FPP software, how many devices you are allowed to install the software on, whether you have the right to move the software to another computer (transfer rights) or not and nowadays whether you are allowed to use the software for commercial use or not.
- The usage rights for FPP software are laid out in the Microsoft Software Licence Terms document, which can be viewed on this site.
OEM Software:
OEM software is software that comes pre-installed when you purchase a new computer. So for instance when you purchase a new PC it might come with an OEM licensed copy of Windows 8.1 Pro pre-installed on it. One of the key benefits of this is that you then know that the software has been installed correctly and is working properly and if there are any issues it is the responsibility of the computer manufacturer or installer to provide support rather than Microsoft.
Again, OEM software usage is ruled by the Microsoft Software Licence Terms document. So for instance it will detail that with Windows 8.1 Pro licensed via OEM you do get limited downgrade rights in that you can downgrade as far back as two earlier versions if you so desire, either to Windows 7 Professional or Windows Vista Business. But that there are no transfer rights, so the software may not be removed from the PC it was originally installed on and installed on another, however, you are allowed to transfer the PC complete with the OEM licensed software to a new user if required.
Volume Licensing
The third channel you may purchase software through is Volume Licensing. There are a number of volume licensing agreements you can purchase through and these agreements have been tailored to suit the differing requirements of all sizes and types of organisation. There are agreements aimed at the small to medium sized business in the form of Open and Open Value, and agreements aimed at medium to large organisations in the form of the Select Plus and Enterprise Agreements.
Usage of software purchased through these agreements is controlled by a number of factors; the agreement itself may contain some usage rights specific to purchasing through that agreement, but the usage rights per product can be found in the Product List document and the Product Use Rights (PUR) document. You can download the Product List and PUR from here.
For example, with an Enterprise Agreement the transfer rights for software are detailed in the Enterprise Agreement document itself, stating that licences may only be transferred once they have been fully paid for and that they can only be transferred to affiliates or a third party as part of a divestiture or merger. So it is always important to check the agreement documents as they will detail rights that are specific to the agreement itself, but what about the more general terms?
This is where documents such as the Product List and PUR come into play. The Product List provides monthly information about Microsoft Software and Online Services licensed through the volume licensing agreements, and details software availability through the different agreements, as well as Software Assurance migration paths, step-up licences and available promotions. The PUR goes into detail on the general volume licensing terms for each licensing model plus any product-specific use rights. All these documents together can be used to determine the licence terms for products purchased through specific agreements.
For example, when you purchase Windows 8.1 Pro through Volume Licensing, the licence is an upgrade licence only. Meaning that the device must already be licensed for a qualifying operating system before installation of the Windows Upgrade. The Product List contains all the detail behind this including a list of the qualifying operating systems per agreement. Whereas the PUR goes into more detail on where Windows 8.1 Pro may be installed and who can access the software either locally or remotely.
Bottom Line / Conclusion:
There are no functional differences. OEM versions are not transferable and are only valid for the first computer on which they are installed. Retail versions can be moved to new hardware. Also, the computer OEM supports OEM versions, whereas Microsoft supports retail versions.
OEM versions tend to arrive pre-installed on the device and supported by the vendor. The retail version is powered by Microsoft, and you are able to install it on any device.
--- END OF THE ARTICLE---
