LICENSING BASICS

We recently took a phone call enquiry about Microsoft Windows XP Pro OEM. No, the person on the line is not a PC dealer. He wanted to have OEM because he heard it is the cheapest.

It is only human nature to want the cheapest alternative available in the market. But price aside, are you getting the right kind of software license suitable for your needs?

If you buy a car from a car dealer, you may do anything you want with your purchase - modify it, strip it, and repaint it. It is your car, nobody can take it away because it is your property. That is, once you have paid for it.

A software product, on the other hand, is different.

You do not own the software. You merely obtain the rights to use it. If you are unaware of this, just take a look at the licensing agreement that comes with each of your software purchase.

End-User License Agreement

A licensing agreement could be printed on a piece of paper or in booklet form found in your software package. Adobe®, Computer Associates®, and Trend Micro® print theirs on paper.

Nowadays, a growing number of environmentally conscious software makers insert an electronic form of licensing agreement into their software packages. You must have seen one of these agreement boxes pop up before you can install your newly purchased software.

Now, you are supposed to read the licensing agreement before installation. However, what most of us do is make the mistake of ignoring it.

A licensing agreement is important as it contains information that may save you money.

Software Transfer

In it, you should be able to find software transfer details, which depict your rights to pass on the product to someone else if you do not require it any more. Software transfer details could be found under the clause “software transfer” or simply “transfer” in the licensing agreement.

Adobe®, Computer Associates®, and Macromedia® allow their software products to be transferred. Software from Autodesk® and McAfee®, however, is not transferable. You could read more about software transfer at http://www.softwareexchange.com.sg/company/faq.aspx.

If you own a transferable software product, you can then sell it like you would sell a used car. The money you get from selling it could be contributed to buying new software.

Downgrade Rights

Licensing agreements also contain information about downgrade rights. So, what exactly is a downgrade right?

If your PC is five-years old and does not meet the minimum system requirements of the latest Microsoft Office 2003, what could you do? You may use an earlier version of the productivity suite, like Office XP. But Office XP has been discontinued.

What you can do is acquire a Microsoft Office 2003 license and install Office XP on your computer. You may do this because the license agreement (containing a downgrade right) says so.

Note that some software makers update their product use rights regularly. Microsoft, for example, updates theirs on a quarterly basis. You can read more about it at http://www.microsoft.com/licensing/default.mspx.

Software Licensing Options

There are a few forms of software licensing: original equipment manufacture (“OEM”), full package product (“FPP”), volume license program (“VLP”), full version, upgrade, maintenance or subscription license, and so forth.

OEM, FPP, and VLP

OEM
Normally acquired by system builders like Dell, Hewlett Packard, and IBM to be bundled with their PCs for sale. Examples are Microsoft Windows XP and Symantec Norton AntiVirus 2004. Many OEM software products also accompany peripherals like CD-ROM writeable drives, motherboards, and so forth. Due to its restriction in usage, OEM software products are usually priced lower than a FPP.

FPP
If your PC is not brand-new, you would have to acquire software programs in the form of FPP or VLP. Software products that come in retail boxes are called FPPs.

Currently, we only offer FPPs in our web store.

VLP
Adobe calls it “Adobe Open Option (AOO)”, Macromedia calls theirs “Macromedia Volume License Program (MVLP)”, and Microsoft names theirs “Open License Program (OLP)”. A layperson would call it “paper license”.

Actually, they all mean the same – volume license program (“VLP”).

VLP is suitable for entities that would like to purchase a sizeable number of software licenses from a particular software maker. So, it is normally acquired by organizations such as companies, societies, or institutions. The organization enrolling in such a program normally needs to adhere to a minimum order quantity.

Full Version, Upgrade, and Maintenance or Subscription Licenses

Full Version
Put simply, it is a version you would have to pay at full price, if you have never owned the license for a particular software product.

In our web store, FPPs are identified only by the product name (either with or without mention of the operating platform), e.g. “Adobe Acrobat 6.0 Win” or “Microsoft Office Professional Edition 2003”, without any suffix, like “Upgrade”.

Upgrade
A typical software manufacturer grows its revenue by (1) developing new products; and (2) ensuring its installed base keeps upgrading its products to newer versions with added or enhanced features.

Evidently, you would never upgrade your software if you need to pay the full price all the time. So, software makers normally provide a discount ranging from 20 to 80 per cent.

In our web store, upgrade products always end with the word “Upgrade”. Sometimes, you may see “Competitive Upgrade” (i.e. product to acquire if you are switching from a competing product) and “Product Upgrade”. Remember to find out the “qualifying prerequisite” you would have to own before you acquire an upgrade product.

Maintenance or Subscription Licenses

A few years ago, Microsoft announced it no longer offers upgrade licenses to companies that seek discounts for upgraded software versions. This new directive was in effect from 31 July 2002.

Microsoft now offers a two-year “Software Assurance (SA)” to companies that acquire software licenses under OLP. This is an example of a maintenance or subscription license. To find out more about Microsoft SA, visit http://www.microsoft.com/licensing/programs/sa/default.mspx.

Another similar software maker is Symantec. Symantec offers a free first-year maintenance license that includes free upgrades, unlimited number of virus definition downloads, and free one-year technical support for their antivirus and security software users under the Symantec Security License Programme (SSLP).

A maintenance license is one that provides upgrade protection and technical support during the eligibility period.

In our web store, you may acquire subscription with a number of products. Let us use the example of “ColdFusion MX Enterprise 6.1 2-CPU Multi-Platform”. If you wish to acquire a subscription license WITH the product, choose “Comm Pack + Sub 2-Yr” or “Edu Pack + Sub 2-Yr”.

Another example is “MYOB Accounting v14 Single-User”. If you would like to obtain a subscription license FOR the product, select “Sub 1-Yr Commercial”.

We have just given you an overview of how software licensing works, but this is not an exhaustive list – licensing is an extraordinarily complex topic. If you would like to find out which licensing type applies to your situation, click here to drop us a note.