Software licensing glossary
Quick answer
A licence is the right to use software; the product key is used to activate it. The most common terms: Retail (sold on its own), OEM (tied to a PC), volume (businesses, via KMS or MAK), perpetual (one-off purchase), CAL (server access) and ESU (fixes after end of support).
Licence and activation
- Licence
- The right to use software under conditions set by the publisher (number of devices, duration, use).
- Product key
- A 25-character code that activates Windows or Office. It proves access to a licence but is not the licence itself.
- Activation
- The step where the software checks its key with Microsoft or a company server.
- Digital licence
- A Windows licence tied to the hardware or the Microsoft account, with no key to re-enter after a reinstall on the same PC.
Licence types
- Retail
- A licence sold on its own, boxed or downloaded, usable on one PC at a time and in principle transferable. See transferring a licence.
- OEM
- A licence sold with a new PC or to a system builder, tied to that PC.
- Volume
- A licence for businesses, bought in bulk; activated by KMS or MAK.
- KMS
- An internal server that activates a company’s machines; a KMS key does not activate on a standalone PC (error 0xC004F074).
- MAK
- A volume key that activates directly with Microsoft, for a limited number of activations.
- Perpetual
- One-off purchase, no expiry date; the version stays usable but is no longer updated after end of support.
- Subscription
- A right of use for a period, to be renewed (Microsoft 365). See Office without a subscription.
- Second-hand licence
- A perpetual licence resold by a first buyer; lawful in the EU under CJEU judgment C-128/11. See second-hand licences are legal.
Servers and businesses
- Core licence
- The Windows Server licensing unit: you count physical cores, with a minimum of 16 per server.
- CAL
- Client access licence: one per user or per device that connects to a server. See per-core licences and CALs.
- RDS CAL
- An additional CAL for Remote Desktop Services. See per user or per device.
End of support
- End of support
- The date after which Microsoft no longer publishes free security fixes for a version.
- ESU
- Extended security updates programme, paid or conditional, after end of support. See Windows 10 ESU.
Frequently asked questions
What is the difference between a key and a licence?
The licence is the right to use the software; the key is the code that activates it. You can have a licence with no key to enter (digital licence).
Does a perpetual licence really last for life?
It does not expire, but the version stops receiving fixes at the end of its support.
What is the difference between OEM and Retail?
An OEM licence is tied to the PC it was sold for; a Retail licence can in principle move from one PC to another, one at a time.