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A question that’s regularly asked by our customers is what is the difference between OEM and Volume licensing, and which one should they purchase when they’re purchasing their new server equipment.

Whilst OEM typically offers the best price when looking to purchase Microsoft Server software, Volume licensing has a number of benefits which may or may not explain the large pricing difference between OEM and Volume Licenses.

1 | Pricing 

To compare, I’ve listed the price of the various prices of Windows Server Standard Edition (16 Cores) when purchasing through different licensing programs. 

For clarity, this is the exact same product, but each product has some different use cases, of which I will detail below.  

OEM: HPE Microsoft Windows Server 2019 Standard Edition (16-Cores): £658.49
Retail: Microsoft Windows Server 2019 Standard (16-Cores + 5 Clients): £1,125.40
Volume License: Microsoft Windows Server Standard Core – 16 Cores: £961.27

2 | Why OEM is Cheaper  

OEM Licensing is always cheaper due to a number of restrictions tied to the OEM license. 

  • Licenses are non-transferrable
  • Licenses expire with the hardware
  • A change of motherboard or processor will deem OEM licenses invalid.
  • There is no upgrade path
  • You will need to keep proof of purchase, invoice or certificate of authenticity.
  • If these proof of purchases are lost, you will need to purchase new licenses.
  • No on-line portal to manage & track licenses
  • No re-imaging rights, due to the license key usage (one different key per install) you cannot create custom images for deployment.
  • Each installation has a different license key compared to a Volume license which has a single key for all installations.

3 | Proof of Purchase  

One advantage that volume licensing has over OEM or Fully Boxed Product, is that all Volume License information is kept within the Microsoft VLSC portal, so your licenses, the product keys and downgrade information is all stored online.

With OEM you have no other information other than the paperwork received at purchase, as proof of purchase.

This adds complexity if you ever have a Microsoft software audit, as for OEM purchases you will have to provide proof of purchase to Microsoft.

For Volume licenses, Microsoft will already have full records on what you have purchased, thus completely removing all of the hard work.

4 | Downgrade Rights  

A common misconception with Microsoft licensing is that there are no downgrade rights with the OEM or Retail boxed  products. 

This is factually incorrect, as detailed here in the official Microsoft Downgrade Rights document, which they are as of yet to update for Windows Server 2019. 

To downgrade, you just need to have the appropriate media and keys already available, which in itself can provide challenging. I presume that Microsoft assume that you will already have this available from a previous purchase of said downgraded version.

Microsoft detail how to access these downgrades, and how many prior versions can be downloaded:

While you have the right to downgrade products, in general, the Microsoft Commercial Licensing Service Center (VLSC) provides download access only to the current (N) and the prior version (N-1) of products. Note: In addition to the VLSC download software access, all Commercial Licensing customers may choose to purchase physical media (CD/DVD) copies of their licensed software through their Microsoft reseller. If you have legally obtained physical media (CD/DVD) of earlier Microsoft products that your organization is currently licensed to use through downgrade rights, you may use these prior software versions at your discretion. For more information about access to prior product versions, please see the fulfillment information at www.microsoft.com/licensing/existing-customers/fulfillment.aspx.

Further information can be found direct on Microsoft’s website via this link: https://www.microsoft.com/en-us/licensing/default.aspx


5 | Virtualisation  

Ah yes, virtualisation. The most commonly misunderstood aspect when it comes to licensing with Microsoft Servers. 

For OEM Licensing – Yes, you CAN virtualise OEM licenses on any of the virtualisation platforms, such as VMware, Hyper-V and Citrix XenServer.

Licensing is applied to the physical server, so providing the physical server itself is licensed correctly, then you are free to migrate, or vMotion your virtual servers between physical servers. 

Servers are licensed on a per core basis, with a minimum requirement of 16-Cores. 

Never mind if you aren’t using all 16-Cores. You need to license all of the cores in the server. 

Next to the puzzle is that for every time you license all cores, you will be allowed to run 2 virtual servers.

If you wish to have 4 virtual servers then you must license all of the cores twice.

Scenarios

If you have a Dual Processor, 10 Core Server then you need enough core licenses to cover 20 cores. This can be made up however you wish, from purchasing a 16-Core license and then a 4-Core license, or 10x 2-Core licenses, and so forth.

This allows you to run 2 Virtual Servers. If you wanted to run 4 Virtual servers then you must license all of the cores again (40-cores in total).

If you have a Single processor with 8 cores, you have to meet the minimum requirements of 16-Cores to run 2 virtual servers.

6 | Datacenter vs Standard  

Datacenter allows an unlimited number of virtual servers, provided all of the server cores have been licensed once.

Standard only allows 2 virtual servers per license.

With this information, and depending on how many VMs you wish to run, you can easily calculate if it’s best to buy Datacenter or multiple Standard licenses.

7 | Summary  

I hope this information has been useful to you. Please do get in touch if you have any comments or suggestions around any additional information which would be useful to include in this article and I will do my best to update accordingly!