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  • Writer's pictureBrandon Alsup

What are the differences between Microsoft Licenses? Managed Service Provider weighs in.

What are the differences between Microsoft Licenses?

Trust us when we say that Microsoft licensing is complicated! We've got a handle on it, but that because we deal with it every day. But most organizations we talk with are somewhat confused or downright bewildered by all the various licenses Microsoft offers. Kosh recently held an internal meeting to go over Microsoft licensing and here are some of the behind-the-scenes key take aways.

In this article, we will go over some of the broad categories of licenses as well as some of the key features or limitations of specific licenses. We'll also look at questions we ask business leaders to be able to recommend the right license for their unique business situation.

Rather than recreate Microsoft's licensing documentation, we are aiming to give some specific actionable knowledge based on our experience using these products.

Primary Categories of Microsoft Licenses

In general, for the purposes of this article, there are six big categories of licensing.

  1. OEM




  5. SPLA

  6. MICROSOFT 365

OEM (Original Equipment Manufacturer)

This is the license that comes from the manufacturer. For example, when you buy a device, like a laptop, from a store like Best Buy or Walmart this is the license that comes with the device. The license is connected to the device and can't be transferred to a different device.

This type of license is only purchased by manufacturers, so not something you can go out and buy.

This license also can't be upgraded. So, whatever you buy, that's what your licensed for.

This license does not include Microsoft Cloud Services such as OneDrive or SharePoint. (Curious about the difference between OneDrive and SharePoint? Find out more in the linked article.)

Retail Licensing

You can go and purchase an individual license. This is a one-time purchase and specific to a computer or piece of hardware. Once it is applied to that hardware, it can't be moved.

For example, if you have a computer that runs Office 2020 and multiple people log into this computer, all users will use Office 2020 - the license is tied to the machine, not the user.

This license does not include Cloud Services such as OneDrive or SharePoint.

Kosh rarely sells this type of license.

Volume Licensing

If you purchase 10 licenses, it's the same product key for all ten installations.

Like the OEM and Retail license, you can't upgrade the version once it's been purchased. This license is also tied to the hardware, not the user, which means no matter who logs into the device, they will experience the same software.

This license does not include Cloud Services such as OneDrive or SharePoint.

Kosh rarely sells this type of license.

Volume Licensing with Software Assurance

The primary difference with Software Assurance is that you get the upgraded software as it comes out. So, let's say you purchased a machine with Office 2019 and Office 2020 comes out during the period of your Software Assurance then you can upgrade to Office 2020.

We typically do not recommend this because the benefits of jumping to the newest version is usually not worth the cost of the Software Assurance. Also, keep in mind that most devices are only under warranty for a maximum of 3 years, so you'll get the updated software when you purchase a new machine.

This license does not include Cloud Services such as OneDrive or SharePoint.

Kosh doesn't see the value of this for our customers.

SPLA (Services Provider License Agreement)

This license can only be purchased by an Authorized Partner (like Kosh Solutions). In order to deploy this license an XML file must be created, and it is rather complicated, which is why everyday retail buyers don't have access to this license.

This license gets applied to a piece of hardware via a product key.

The Authorized Microsoft Partner is responsible for reporting how many and what kind of licenses are being used. Microsoft bills the Authorized Partner, and it is up to the Authorized Partner to bill the end customer.

This license does not include Cloud Services such as OneDrive or SharePoint.

Kosh includes this licensing as part of our managed services. We primarily use this for licensing server operating systems.

Microsoft 365

Here's the big one! 365 is the only license type that includes Microsoft cloud services.

Here's an amazing resource that helps layout all the complexities around licensing:

Check out the Feature Matrix, it's awesome!

License types we typically recommend for the organizations we manage:

  • Microsoft 365 Business Premium

  • Microsoft 365 Frontline F3

  • Microsoft 365 Enterprise E3

  • Microsoft 365 Enterprise E5

All of these licenses come with Entra ID Plan 1. This is important because it allows for Conditional Access (which is used for security purposes) and Geo Blocking - among many other features.

One of the determining factors we come across when determining licensing is how much email storage the customer needs. See below for how much each license provides.

  • Business Premium = 50GB

  • F3 = 2GB

  • E3 = 100 GB

  • E5 = 100 GB

So, if a user needs more email storage (and more email archive storage), they will need to go for the E3 or E5 license.

Or perhaps you have frontline staff that don't need much in the way of email, in that case the F3 may be appropriate.

Be aware Microsoft does have retail and nonprofit pricing for all these licenses. The nonprofit pricing is significantly less. If you are a nonprofit be sure to take advantage of that!

Professional Managed Service Provider Tip

Kosh recommends most customers opt for the monthly subscription rather than the annual simply because most businesses experience turn over in staff and may need to adjust the number of licenses month to month. Making a monthly adjustment is more cost effective than the upfront discount of paying annually.

Hopefully this has provided some insights into your own Microsoft licensing situation. It's critical for organizations to have the right licensing in place in order to not overpay for features they don't need and to make sure the right capabilities are supported by the license.

If you have Microsoft licensing, managed service, or project needs, feel free to contact us.



The information contained in this communication is intended for limited use for informational purposes only. It is not considered professional advice, and instead, is general information that may or may not apply to specific situations. Each case is unique and should be evaluated on its own by a professional qualified to provide advice specifically intended to protect your individual situation. Kosh is not liable for improper use of this information.


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