Microsoft Licensing

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This report is part of a larger series of Directions on Microsoft Licensing Outlines and should be used in connection with the Directions on Microsoft Enterprise Software Roadmap.

Introduction

Expertise in Microsoft licensing requires, besides an extraordinary appetite for detail and fine print, knowing where the rules live. Even those who aren't licensing experts still need to live by the rules, and there is no single "Bible of Microsoft Licensing" that contains them all in a clear, navigable format.

By tracking five particular resources, however, organizations or individuals can glean most of the important information they need. Some people, such as software asset managers, should review new versions of these documents regularly. IT specialists should ensure that they review relevant rules for any products they deploy. Procurement specialists should review relevant documents before purchasing the software to ensure that it can be used as intended.

Directions also recommends that organizations maintain an ongoing library of licensing resources, because in many cases the rules that apply to a given product are the rules that were in place at the time the product was purchased or deployed, and unless they have kept their own records, preferably time-stamped and archived to optical storage that can't be overwritten or modified, they may not be able to defend a particular use, especially if an archived version of their documentation is no longer available from Microsoft or their reseller.

The five essential resources for Microsoft software are the following:

• End User Licensing Agreements
• Product Use Rights
• Volume Products List
• Microsoft Licensing Advisor
• Licensing Briefs

A sixth, which isn’t covered here because the terms are not public, is the volume agreement that the customer signs, which may convey additional rights, protections, and restrictions.

End User Licensing Agreements.

The End User License Agreement (EULA, now officially Retail or OEM Software License Terms) is the foundation of a user's rights with Microsoft software, even though few users ever read it. IT professionals, however, should take the time because EULAs can contain significant, but rarely used, rights, as well as many obscure restrictions.

Where a product can be installed (on physical or virtual machines, for example), how many times it can be installed, whether it is transferable or can be downgraded, who can remotely connect to it, and the information that you are authorizing Microsoft to collect are all described in the EULA.

Anyone in charge of asset management for an organization should maintain a library of EULAs for every application that the organization installs, tying each EULA to the physical computers on which the software is installed and the date of installation. Note that EULAs can change over time and without announcement; for example, a service pack may include a new EULA that is generally accepted by the person installing the service pack. Therefore, tracking EULAs is a less-than-trivial task, particularly with the large number of EULAs for downloaded products that may not leave a EULA file on the computer where the software is installed. (In setting up a library of EULAs, an organization may want to set policies about who in the organization can and cannot accept EULAs, and who is responsible for ensuring a copy of a new or updated EULA is placed in the library.)

Many EULAs contain some hidden gems.

For example, companies exploring a virtual desktop infrastructure may be able to design a system that complies with the rules for remote desktop access rights that are described in the EULAs for business versions of Windows (XP, Vista, and Windows 7). These rights let users remotely access a physical or virtual machine over the Internet without requiring special Client Access Licenses (CALs), Software Assurance (SA), Virtual Enterprise Centralized Desktops, Terminal Services CALs, or any of the myriad programs that Microsoft tries to put between remote users and centralized physical or virtual machines. These rights are governed by some specific restrictions, but they are usable if you read the EULA carefully and design an infrastructure that can detect the OS or identify the license status of particular users.

Another Windows client right embedded in the EULA: if you want to run a lightweight Web server, you don't need an expensive server—the EULA lets a workstation (even one running Windows Home Premium) run Microsoft's Web server software, IIS, and handle up to 20 connections.

The EULA also describes what you need to have to prove that you own a product. How many of us keep the box that our software comes in? Too bad if you don't—you may have just thrown away proof that you have a legal license for the product.

EULAs don't change very often, but changes may not always be publicized, so business customers should keep a library of dated EULAs and add new instances periodically to make sure that they can accurately identify the rights that apply to the software they buy, especially through retail or OEM channels. (Microsoft keeps track of volume licensing purchases, which partially solves the problem, but they don't keep old EULAs around for easy access.)

EULAs for retail and OEM products can be found at www.microsoft.com/about/legal/useterms.

Product Use Rights

Microsoft's Product Use Rights document, known among licensing cognoscenti as the PUR, covers products purchased through volume licensing programs. In general, it is the last word on the licensed rights and restrictions for most of the software used in businesses with more than about 10 computers.

The PUR repeats, supplements and sometimes replaces the provisions of a product's EULA with additional rights and restrictions. Because the PUR is referenced in volume licensing contracts, it has significant legal force.

The core of the PUR is its thorough description of how Microsoft business products are licensed. At more than 130 pages, it is not light reading, but it is essential reading for asset managers, IT planners, procurement staff, and others.

The PUR organizes every Microsoft product by one (rarely two) of 10 "models," and each model encompasses from two to 35 products. It also has detailed information about benefits that come with SA, Microsoft's upgrade and maintenance plan. (For an example of how the PUR describes a model, see the illustration "A PUR Model".)

For a licensing novice, the PUR also has a useful illustrated introduction to the various licensing models.

The PUR is updated quarterly, and the rights that apply to a given license are the rights embedded in the PUR at the time it was purchased. As a result, products purchased at different times can have different licensing provisions and rights and volume licensing customers should download and file a copy of the PUR each quarter to track the rights that apply to particular licenses..

Each PUR contains a section near the top that describes changes and clarifications to Microsoft licensing rules, and if IT, procurement, and asset management staff read nothing else each quarter, they should review the changes. Not all changes in the PUR appear on the change list, however. As a result, IT specialists should review PUR sections related to the products they manage to identify all revant changes.

Any IT staff with responsibilities related to specific products or groups of products should be familiar with the relevant sections of the PUR and should review them every quarter when a new PUR comes out.

For example, desktop deployment and support staff should review the sections that cover products covered by the desktop OS and desktop application models. People who manage basic infrastructure or who specialize in specific products, such as Windows Server, Exchange Server, or SQL Server, should be familiar with the relevant PUR sections and check them carefully for changes each quarter.

Some models, such as the model for management servers, are particularly complex, with numerous exceptions and special provisions, as well as frequent changes as Microsoft places more emphasis on management tools. Any staff implementing these products should be given time to ensure that they have a thorough understanding of how these products are licensed and how different products require different management licenses.

The PUR can be found from a link at www.microsoftvolumelicensing.com.

Microsoft Products List

The Volume Products List is the official list of products and online services that can be purchased through a volume licensing program. Like the PUR, it has legal force because it's referenced in signed volume licensing agreements.

More than a mere list of products, the Product List is the canonical guide to how customers earn discounts by purchasing licenses and which software is available through which program.

The guts of the Product List is a complex table that lists products by their "pool," so it helps to be familiar with the three pools—systems, applications, and servers—into which Microsoft divides its volume products. The table shows the dates that products became officially available (important in determining some support dates and whether your SA contract entitles you to an upgrade); which products are available in Open, Select, Campus, and Enterprise Agreements; and in the case of Enterprise Agreements, which products are "platform products" bought for every workstation in the organization and which can be purchased individually as "additional products."

The table also lists how many "points" each license is worth. (Points are used to calculate discounts in Select and some other programs.) Many products also carry notes that list promotions, special upgrades and other provisions. The notes pop up when you hover over them. (For a sample of the list, see the illustration "Microsoft Products List".)

Like the PUR, the Products List has a section that lists changes, in this case for each of the last 12 months. In general, these changes aren't as critical as the change list in the PUR.

Buried midway through the Products List is an appendix that lists various product promotions. Mostly overlooked, it can be a goldmine. During the run-up to Windows 7's release, for example, it was where Microsoft offered its most generous concession for purchasing SA on the Windows client OS. Normally, SA can only be purchased for the Windows OS on a new PC within 90 days of the PC's purchase. This offer permitted customers to go back more than a year, to Aug. 1, 2008, and add SA to any PC they purchased (with Vista Business) through the Open License program.

This offer was so well hidden that Directions found no one in Microsoft's headquarters, its field sales force, or its reseller community who was aware of it, and at times they resisted admitting it existed until we pointed it out. But business customers who took the time to review the Products List and saw the promotion got one of the least expensive upgrades to Windows 7 (US$108) for PCs they purchased with Vista; furthermore, for that bargain price they were entitled to install the most advanced edition of Windows 7, the Enterprise edition.

A Products List appendix with the innocuous heading "Additional Terms" hides dozens of important rules about license transitions, ordering media (purchased separately from license in volume licensing programs), and many other issues.

The "License Types and Fees" appendix is a relatively easy-to-read guide to the minutiae of various kinds of licenses and SA, followed by 32 pages of rules, qualifications, and descriptions of benefits associated with SA. Organizations that add SA to their licenses should pay careful attention to these benefits—most SA benefits go unexercised, constituting a significant entitlement that many customers neglect.

The Products List can be downloaded each month from a link at www.microsoftvolumelicensing.com.

Product Licensing Advisor

Getting prices for Microsoft products can be an enormous time sink, particularly for customers purchasing large numbers of licenses. Abbreviated product names require considerable expertise to decipher, and novices will find many impossible to understand. (Even if we told you that "NL" means "No Level," would you be any wiser? Not likely, because it means exactly the opposite of its name: it is the one and only discount level in the Open Business volume licensing plan.)

Slight differences in product names often signal significant differences in prices, and customers need to approach price lists with a solid understanding of the differences between enterprise and standard editions, products that are part of a platform and those that aren't, and prices for product licenses versus prices for SA on those licenses, among other trip-wires hidden in Microsoft price lists.

The quick solution: ask your reseller for help.

Those who want to avoid the siren call of a reseller can start their pricing quest at https://partner.microsoft.com/US/40018460 (no partner registration is required). Labeled "Estimated Retail Price Lists," they are in fact not retail prices as most of us think of them, but pricing for licenses purchased through various iterations of Open License, a simple volume licensing program that requires the purchase of only five licenses to start getting a discount.

Commercial customers should look at the "Open Business" price list. Open License prices for government, education, and charity customers are also available here. They all appear in the omnibus "Microsoft U.S. Open License Estimated Retail Price List," but readers should make sure they are looking at the correct Open tab (e.g., Open Business) in that spreadsheet.

A warning: long and complex product and license names are shortened to squeeze into tiny Excel cells. For example, a System Center Configuration Manager Standard Server Management License appears on the Open Price list as "SysCtrCnfgMgrSvrMLStd 2007R2 SNGL OLP NL." (For a guide to reading the Open License price list, see the chart "Volume Pricing Decoded".)

Most midmarket and enterprise customers are eligible for more substantial volume discounts through the Select License and Enterprise Agreement programs, as well as the Open Value program, which offers better-than-Open discounts for customers up to about 1,000 PCs. Those prices aren't out in the open for download.

Curious customers can get at them through the Microsoft License Advisor (MLA), a Web site that leads customers through a series of questions about the product they want to license, how many licenses they want, whether they want to add SA, and so on.

The MLA has many valuable features, including the following:

• Pricing for Open Value, Select License, and Enterprise Agreements
• Descriptions of Product Use Rights and sales promotions associated with the licenses selected
• Year-by-year breakdowns of what a customer will pay in programs that offer multiyear payments
• Information about financing a purchase through Microsoft Financing
• The ability to download quotes as Excel or Word documents
• The ability to develop a quote and then generate a unique identifier for it. The identifier can then be sent to one or more resellers who can use it to pull up the price list that the customer generated and provide the customer with actual pricing for the licenses. (Resellers may sell products for less than the "estimated retail prices" used in the MLA.)

The MLA takes some practice to master, however. Navigating through all the choices takes time, and customers without prior knowledge of various licensing programs can easily be confused by the options presented and how to interpret the final results. (For a view of the MLA, see the illustration "Microsoft Licensing Advisor".)

Licensing Briefs

Microsoft's library of Licensing Briefs is a useful starting point for the licensing novice who has difficulty with the complex and detailed language of the Product Use Rights or Volume Products List.

These briefs provide scenarios, often illustrated, that can help customers see how licensing rules can be translated into actual IT architectures.

Unlike the Product Use Rights and the Volume Products List, briefs don't have legal force. In addition, whether or not a given licensing topic has an associated brief is arbitrary, although the briefs do cover many common and complex licensing scenarios.

Briefs should not be regarded as authoritative, particularly since some are fairly old (although our recent review of current licensing briefs found few instances of old or incomplete information in the briefs).

Organizations should keep a library of briefs, dated by their date of download. (Although the documents themselves carry the dates of publication, those don't constitute proof that Microsoft was publishing a particular brief at a particular time.) While a brief doesn't carry legal force, the fact that it was Microsoft's current advice at the particular time that a customer implemented a particular architecture should be of some value in defending oneself against charges of willful noncompliance.

Licensing briefs can be found at www.microsoft.com/licensing/about-licensing/volume-licensing-briefs.aspx.