Software licenses: perpetual, subscription, OEM, retail and ESD compared

Anyone buying software for work quickly realizes that the price is only part of the choice. Two offers can refer to the same program and provide different conditions: duration, authorized users, devices and transfer possibilities.

Misunderstandings arise when these characteristics are confused. A license that fits your current computer may not be transferable to your new computer; a subscription may include services that a one-time purchase does not include. Before comparing prices, it is best to understand what you are buying.

What are software licenses? The short answer

A license establishes the right to use a program and the terms of its use. In commercial software, you often encounter purchases with perpetual right of use and limited-term subscriptions. Retail, OEM and Volume instead concern supply channels and conditions; ESD describes digital delivery. They are different aspects of the same offer.

The contract explains what you can do with the program

Purchasing a copy does not mean you acquire copyright on the code. The applicable terms indicate, for example, how many users and devices are authorized, whether professional use is permitted and what rules apply when changing computers.

These conditions depend on the product, edition and purchase channel. The name of the program alone is not enough to reconstruct them: the product page should clearly identify the version and the usage rights supplied.

Perpetual license or subscription: the duration of usage rights

A perpetual license grants the right to use a specific version without a predefined contractual expiry date. An example is Office 2024 with a one-time purchase. This does not automatically include later major releases, unlimited support, or compatibility with any future computer.

With a subscription the right of use depends on the plan and the period covered. Updates to features, applications and cloud services may be included, but the included features must be checked for the specific plan.

Turning off automatic renewal does not necessarily mean immediately losing the period already paid for. Upon expiry, the terms of service apply: some functions may become limited or access may end. There is no identical rule for all manufacturers.

The economic comparison makes sense after clarifying these differences. We have covered prices in the articles on how much the Office package costs and on how much AutoCAD costs: the respective licensing models must be evaluated separately.

Retail / OEM / Volume: channels and conditions to distinguish

• Retail: an offer intended for retail sale. For many products it is possible to transfer to another device, respecting the terms and removing the previous installation. The specific case must be verified.
• OEM: a supply normally associated with a device from the manufacturer or assembler. The conditions can link the right of use to that device: transferability to a different computer should not be assumed.
• Volume: licensing agreements aimed at organizations, with their own assignment and management rules. They can provide perpetual rights or subscriptions; they are not simply defined as "one key for many computers".

The distinction between perpetual and subscription therefore does not coincide with that between Retail, OEM and Volume. Microsoft documents, for example, the presence of perpetual rights and subscriptions in its Volume licensing documentation.

What ESD really means

ESD stands for Electronic Software Delivery and indicates a digital delivery method. Instead of receiving a physical package, the buyer receives download and activation information according to the purchased offer.

ESD is not an alternative category to Retail or OEM and does not, by itself, demonstrate that the license is perpetual or transferable. When an advert talks about an "ESD license", it is still necessary to verify the type of right of use and its conditions.

Can a license be moved to another computer?

It depends on the product and the applicable terms. Many retail licenses allow transfer by removing the copy from the old device; for some there are specific limits and procedures. OEM licenses are normally associated with the original device.

For example, Microsoft describes the conditions for moving some Office editions on the transfer an Office license page. You shouldn't automatically extend those conditions to every program.

Before purchasing, ask if the right of use covers your case: replacement of the computer, hardware failure and transfer to another person are not necessarily the same operation.

Used software licenses in Europe: which conditions to check

Case C-128/11, UsedSoft v. Oracle, concerns the resale of software copies downloaded from the Internet. The exhaustion of the distribution right requires precise conditions: first marketing in the Union by the owner or with his consent, right of use of unlimited duration against payment and the transferor's copy rendered unusable. The Court also excludes the splitting of the multi-user license in the case described.

The Court of Justice statement on case C-128/11 summarizes these principles. The reference does not automatically certify every code on sale: for a specific offer it is necessary to verify origin, conditions and available documentation.

How to evaluate an offer before buying

• Identify product and edition. Check version, operating system and intended use.
• Clarify duration and limits. Verify users, devices and transfer conditions.
• Request conditions and documents. The invoice documents the purchase, but does not replace the information on the usage rights supplied.
• Check support and delivery. Knowing who to contact and what steps are required helps manage activation.

The price is one of the elements to compare, not sufficient proof of the validity of the license. It must be read together with the conditions of the offer.

In the Macrosoft catalog you will find software with conditions indicated on the individual product pages. For doubts about use, duration or transferability you can contact support from Monday to Saturday, from 9am to 8pm, via the contact us page.

Frequently asked questions

What is the difference between a perpetual license and a subscription?

A perpetual license grants the right to use the purchased version without a predefined contractual expiry date. The subscription covers a period and can include different services. Support, updates and technical requirements must be verified separately.

Are ESD and Retail the same thing?

No. ESD describes digital delivery; Retail concerns the channel and the conditions of the offer. To know what you can do with the program, you need both pieces of information.

Can an OEM license be transferred?

Don't assume it's transferable: it's normally associated with the original device. Before moving it, you need to check the terms applicable to the product and the specific situation.

How many installations does one license allow?

The number of users, installations and concurrent logins are different limits. A plan that can be shared with multiple people does not automatically authorize the same number of devices: the plan’s actual terms determine what is allowed.

Is buying a used license always allowed?

The evaluation depends on the conditions of the right of use and the exhaustion of the distribution right. The price, a working key or just the reference to the Court’s judgment are not enough: check the offer documents.

Before comparing two offers, start with three questions: which version do you need, for how long and on which devices? You can explore the Microsoft Office and operating systems sections; for the programs included in the suites you can find the guide to the Office package.