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Microsoft Licensing

Posted on 2012-09-12
Medium Priority
Last Modified: 2012-10-04

     Trying to figure out to buy about 30 Windows 7 Pro Licesnses, still be in compliance with Microsoft's highly complicated licensing agreements, and not spend an arm and a leg.  The scenario is very basic, I need around 30 licenses to reload 30 pc's with fresh images throughout a small organization.  I was going to try retail but each one is 270 a pop, that's $8100.00, and that's very expensive.  Then I thought I would try OEM, but that's complicated as Microsoft says you can't use it unless you sell the system to a third party after you install the OS.  Not to mention the fact that if so much as a dust bunny moves from one capacitor to another on the mother board, it triggers the activation in Windows.  Then I looked to Volume Licensing, but that requires a previously installed version of Windows (face palm), you can't transfer it to a new pc (face palm), and the OS that you're upgrading from must be OEM (face through desk into floor).  So at this point I'm confused, does anyone know the best license to purchase in this instance, it would seem to me that retail would be the one, but I seriously doubt the company owner is willing to shell out 8000 bucks to Microsoft.  Any and all help is greatly appreciated, thanks.

Side note:  I'm also going to have to figure out what Office License to buy to install on each computer, so if anyone knows that off the top of their head and they could tell me which one I would greatly appreciate it.  Thanks.
Question by:ctagle
LVL 28

Accepted Solution

Ryan McCauley earned 668 total points
ID: 38391328
You don't share in your question what the current OS on the computers is, but you can always buy an upgrade license - it requires that the PCs have XP or Vista on them, and it's about $100 cheaper than a new retail box. I did some quick searching and it seems that the upgrade disk will let you do a clean installation, including formatting, but requires that XP/Vista be installed first (hence the "upgrade"). (See http://news.cnet.com/windows-7-upgrade-dos-and-don-ts)

You can also try Microsoft Open licensing - as long as you're buying more than 5 units at a time (a unit is any product, so two Windows and three Office together would count), you can qualify for discounted pricing for what's essentially a full license. Though pricing is part of your agreement so it can vary, some Googling appears to put this down at around $180 for a full license. If you're a government entity or a registered charity, the price can be dropped quite a bit lower.

In summary, the licenses aren't cheap - even at charity pricing, you'd be paying several thousand dollars for the Windows alone, with Office on top of that. You can also investigate other products with similar functionality at a lower price point if you're adverse to paying the fees - you're generally stuck with Windows, but could check out other options for Office support like OpenOffice.

OEM licensing is pretty straightforward, though it can seem confusing in some cases - basically, it exists so that companies like Dell and HP can put Windows on their new PCs without tacking $300 onto the price of the PC - it's actually somewhere down around $80 in most cases. However, the licenses are (for obvious reasons) highly restricted, and can't be moved to new machines. If your machines have OEM licenses on them now, I believe they'd still qualify for the upgrade to Windows 7, so you're not paying full price there. In your case, you don't qualify for OEM because you're not a reseller.
LVL 97

Expert Comment

by:Lee W, MVP
ID: 38391330
So you have 30 new machines with WHAT right now?  No license at all?  You bought them with Home?

> you can't transfer it to a new pc (face palm), and the
> OS that you're upgrading from must be OEM

Where did you read the OS you're upgrading from must be OEM?  I don't recall ever seeing that and I've read licenses a number of times (I COULD have missed it or something may have changed, but I'd appreciate seeing where you read and interpreted that so I can see and perhaps even clarify).

If the machines were purchased with home, then you should be able to use the Anytime Upgrade at $90 per machine.  Total of $2700.  Then for the imaging, the good news is that you don't NEED to purchase 30 Volume Licenses... you only need ONE, especially if you buy 30 copies of Office.  Reimaging rights permit the deployment of a volume license image to all systems that previously ran the same level operating system.  For example, while you COULD NOT buy an Enterprise volume license and then deploy 30 copies of Enterprise (because Enterprise is only available through VL programs and NOT EVER sold preinstalled on a machine), you COULD buy one VL and for all systems that have Windows 7 Pro on them, you can deploy a Windows 7 Pro VL image.  (Google "Reimaging Rights" for a 2 page word doc from Microsoft on this).  That means you only need need ONE $200 (rounding) VL license which equates to $2900 for Windows.  

Now if the machines are BARE AND they've been ordered and received by the end user, you may be able to to "turn into" a system builder and "sell" the systems to yourself and in that case, buy OEM licenses at about $160 each (if I remember pricing correctly).  This would put the cost at about $5000 for Windows licenses.  If you bought the machines from a large OEM, then the actual Windows licensing cost (never really broken down for you) probably would have been about $130 each for Pro as I think the base Windows license to large OEMs can be as low as $40 or 50 and I THINK the "upgrade" to Pro is usually $90 more.  

(It sounds like someone thought they'd be get a deal by NOT buying the systems with OS licenses and get them separately and never looked into it in detail before hand to know this was not a good idea).

As for Office, I wouldn't buy OEM Office to begin with except for the small orders of less than 5.  Once you need more than 5 copies, I definitely go with Volume License EVEN if it's more expensive than retail by a few dollars.  This is in part because you can ONLY use Volume License installs of Office in RDS environments so if and when an RDS server is installed, you at least already have 30 copies of Office capable of being attributed to it.

As for price... for 30... you should get a LITTLE discount, but don't expect much.  For easy math, I would expect ABOUT $300 per copy if you need Standard and $400 if you need Pro.  But I could be wrong.  And yes, it's expensive.  One possible way around the initial cost is Microsoft's licensing programs that allow you to pay each year... you might get away with $100 per computer per year for Office and ALWAYS get the most current version (it would include SA).  But you never stop paying each year and if you do, you lose the right to use office.

At the end of the day, I would call Microsoft and explain the situation and see what they recommend as legal.  Then I would call an authorized VL reseller (such as Dell - they usually got me better prices than anyone else, including my independent vendor, Ingram) and ask them for a quote.

Licensing IS complicated because Microsoft is flexible... and a PITA.

DISCLAIMER: Licensing advice offered here is a "best effort" and based on the understanding of the respondents. Licenses can change and we may not be aware of these changes or may misunderstand them. Further, licenses can differ by country and/or region and what we understand to be true in our region could be false in your region. "they told me on Experts-Exchange" will not be a valid defense in a software audit.  All licensing questions should be confirmed with the appropriate licensing authority (the maker of the software/issuer of the license).

Author Comment

ID: 38391576
First of all let me clarify the machines are NOT clean machines with no OS, this is a business thats already in place that we took on as a client to provide IT service to them.  The machines are running a mixture of Windows 7 Home Premium, Windows Vista Home, a few Windows 7 Pro, and a few Windows Vista Business.  The purpose of reimaging all of them is that the last IT provider had no anti-virus software on the machines and no real clear direction with the computers.  Everything is different from PC to PC and we would like to just wipe the HDD and reload them all to start them off from a clean slate, plus when their new server comes in we will be moving them over to a domain.  

Also I apologize and retract my statement about the OEM pre-installation being required for the Volume Licensing to work, upon further reading I realized I misinterpreted the licensing for that particular product.
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LVL 97

Assisted Solution

by:Lee W, MVP
Lee W, MVP earned 664 total points
ID: 38392486
Since these machines all have OSs on them, then you do not need to buy any full retail or OEM licenses.  Full retail would be too expensive and OEM wouldn't be appropriate.

The machines that have pro are golden - no need to do anything as far as Windows licenses go.  The machines on a "home" Operating System DO need to be upgraded to Pro - the Win7 machines can use Anytime Upgrade so they are covered at about $90 each.  The Vista machines might require a Full Package Product UPGRADE to Windows 7 Pro which would likely be ABOUT $200 each.  so count the installs and this gives you an idea on your OS upgrade price to get everything to Win7 Pro.  THEN, as I said, you need a volume license to create an image.  BUT JUST ONE.  If you ONLY buy Windows 7 Volume license and the client does NOT have a VL agreement active already, then you need to buy a minimum of 5.  If they do have a VL agreement active OR you buy those 30 copies of Office, you should be able to get a SINGLE VL license at about $180.  Think of the VL license to be like the cost of Ghost - only it's a Microsoft Product.  (Again, refer to the Re-Imaging Rights doc I referenced).  Then you have to move on to office - as I discussed before.

Assisted Solution

BlueDiver earned 668 total points
ID: 38394146
OK, first a few basics;

OEM is cheap, difficult to manage and lives and dies with the machine
FPP (Full Packaged Product or retail) is expensive and difficult to manage, but you can move the license from a dead machine to a new machine
Volume is the easiest license (and sometimes cheaper), but only provides upgrades

With Volume you also have the right to re-image the machine

Upgrades to Windows 7 pro can only be done from business installations. Not home.

Assuming all the machines are capable of running Windows 7. This is what I would recommend;
1) Buy Windows 7 OEM for those machine with Home edition (this gives the ability to configure the machines in a domain, etc)
2) Create a Microsoft Open Volume License Agreement (Any Microsoft Partner can do this for you) and buy sufficient Windows 7 upgrade licenses to cover the Vista Business machines. To qualify for the Volume Agreement, you must purchase at least 5 of these licenses.
3) Download the Media and Keys from the Volume License Web-site
4) re-image the machines

The re-image can be manual or you can use free Microsoft tools such as WDS, etc

Hope this helps

Author Closing Comment

ID: 38463199
I thank you for the responses, the licensing has become a little clearer.  I contacted Microsoft for the volume licensing though and because they are once again trying to force a new product on us their "open" licensing isn't available for windows 7 only windows 8, and after all the downgrades, the office products, and the open licenses, it came out to over $18000.00 for only 25 licenses of each product when I talked to Microsoft, a cost thats completely unacceptable on several different levels.  So I just decided to go with OEM, a clause can be placed in the contract with them that will allow us to stay in the clear.

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