Microsoft Licensing FAQ


1. What happens to all the Microsoft customers that did not subscribe to Software Assurance?

    Hopefully users that did not upgrade know that there is now no right to upgrade and that the only way to upgrade Microsoft software is to purchase a completely new licence.

    This article aims to answer many of the questions that businesses may have and that remain unanswered by Microsoft's website.

2. Can users purchase new software direct from Microsoft New Zealand?

    No. The Microsoft New Zealand website directs you to Microsoft Retailers or Microsoft Certified Partners. Microsoft explains that:

    Microsoft® Certified Partners are independent companies that can provide you with the highest levels of technical expertise, strategic thinking, and hands-on skills. Microsoft Certified Partners encompass a broad range of expertise and vendor affiliations and their real world perspective can help you prioritize and effectively deliver your technology solutions.

    Users looking to purchase retail versions of software to upgrade an existing computer will need to purchase the licence from Microsoft Retailers or Microsoft Certified Partners.

    The channel partners programme is not documented so users may have to sort out by trial and error whether a particular licence can be purchased from a particular channel partner. For example Dick Smith lists MS Windows 2000 Server, MS Windows XP, MS Office and selective MS Client Access Licences but not specialised server applications such as MS Exchange or MS SQL Server.

    For users planning to upgrade to MS SQL Server or MS Exchange the source of the software is not obvious from the Microsoft New Zealand website. Althought Microsoft Certified Partners are listed on Microsoft's website, the MS Partner's websites that we visited did not include information on how to calculate your Software Licence requirements.

3. Where should Microsoft customers go on the Microsoft website to calculate the cost of upgrading Software Licences?

    Microsoft has an online calculator but this is only usable by Software Assurance customers. It is located at http://eopen.microsoft.com/EN/default.asp.

    eOpen allows you to:

    Logon to “eopen” requires users to get a Microsoft Passport.

    Users that do not want to be registered in the MS Passport database cannot use this service. There is no alternative service (refer to http://www.clendons.co.nz/library/articles/passport_privacy.htm on MS Passport).

    Users with an MS Passport Identification Number must also have both Microsoft Software Licence Key and Microsoft Authorisation Number to proceed. The costs of Software Assurance cannot be calculated unless you have already purchased software licenses.

    We have been unable to locate any Microsoft Software Licence calculators on the global Microsoft website nor any third party calculators.

4. Why does Microsoft not provide the ability for its customers to calculate the costs of Microsoft software?

    According to executives of Microsoft New Zealand the reason is that this is an issue for its Partners to deal with. However, as we noted above we have been unable to find any MS Certified Partner that provides this information.

    It is therefore encouraging that both Microsoft Retailers and MS Certified Partners (also known as Independent Software Vendors or ISV's) across New Zealand have been invited to a Microsoft Software Licensing seminar by Microsoft through August and September. For details of the seminar see http://www.microsoft.com/nz/partner/trainingevents/licensing.

    This training ends on September 11. We recommend that users leave questions on Microsoft Licensing until then unless the Microsoft Retailer or Certified Partner confirms that they have already been trained by Microsoft in a prior seminar.

5. As there is only US software price information available at http://shop.microsoft.com/ can users rely on price parity?

    Microsoft makes no specific commitment to price parity. For example Microsoft prices MS Office XP Professional at US$579.00 and Dick Smith in New Zealand prices it at NZ$1659.00. Given that 1 New Zealand Dollar currently equals approximately 0.46 US Dollars, we would expect the New Zealand price to be closer to NZ$1240.00.

    Furthermore Microsoft in the USA offers financing for Microsoft Software Licence purchases. To our knowledge no such scheme has been publically made available here in New Zealand.

6. How are Software and Client Access Licence terms made known to Microsoft customers?

    This depends on the Microsoft Licence.

    1. Retail Microsoft Software Licences are available in hardcopy form with the packaged product and in softcopy during and after you run the installation. Normally users cannot open the package until the item is purchased. There are no public copies available on the web for your look at before buying.

    2. OEM Microsoft Software Licenses are available on receipt of the computer. Users may be able to see the licence prior to purchasing the computer, especially if the computer is purchased from a retail store and the retailer makes the Licence available. Again, no public copies are available.

    3. Microsoft Client Access Licences normally come bundled with Microsoft Server Licences. Otherwise, if users purchase further CALs then the Licence Document or Certificate is generally the only physical item that is provided. CALs are not software but a license to connect a device to a network server. Again, no public copies are available.

    4. The new MS Windows 2000 Server Internet Connector Licence is not described on the licensing section of Microsoft's website. The Licence Agreement is not available online. Microsoft only states that the Internet Connector Licence “allows for an unlimited number of authenticated Internet connections”.

      Microsoft's explanation is not consistent in that it appears to treat “http” access and authentication differently to that of “ftp”. Both “ftp” and “telnet” do not require CALs because they do not use the MS Windows 2000 Server network services. Authenticated websites, such as an extranet are considered to use the network services.

    5. Microsoft's Volume licensing models such as the Open, Select and Enterprise Agreements are explained on the licensing section of Microsoft's website.

Here are the three simple steps to get started with a Microsoft Volume Licensing program:

The Microsoft Volume Licence Agreements are not available for download prior to purchasing.


7. Is there a book explaining licensing in particular the changes in Microsoft licensing?

    We have been unable to find any books on Microsoft licensing locally or through www.amazon.com. Microsoft has many advisories but none are comprehensive or complete in that the documents actually set out the contract which Microsoft requires you to agree to before you purchase.

8. The terms used in Microsoft Licences are complicated, how can Microsoft's customers find out what they mean?

    The terms used are complicated and often definitions change over time. Microsoft does have a Licensing Glossary available at http://www.microsoft.com/licensing/resources/glossary.asp.

    However, the Glossary is incomplete and there are several terms that are defined here that differ to the legal definition given in the actual Licence Agreement.

    By way of example, the references to CALs on the Microsoft website are inconsistent and the rights of the Licence holder defined in each CAL often differ. Some CALs “license the right to access” while others are “a license to access”. In Intellectual Property Law these distinctions are important and unfortunately there are no guides to assist users to deal with such inconsistencies.

    A further example of the care that is required in understanding Microsoft Licences is demonstrated by comparing three types of CAL: MS Windows 2000 Server, MS SQL Server and MS BackOffice.

    MS Windows 2000 Server CALs are required for devices that use MS Windows 2000 authentication. MS SQL Server CALs do not refer to any specific devices requirements. MS BackOffice CALs are required for all devices.

    It is important to note that devices are defined so that on a strict interpretation you need CALs for at least the following:

    1. all non-server computers,

    2. all network printers,

    3. connections by Virtual Private Network (VPN),

    4. hand-held pc's, pagers and smart phones.

9. How do I read the Microsoft legal documents?

    As noted above, the legal information including product information on Microsoft's website and the terms of its Licences are complicated and require careful consideration.

    We have been unable to locate a single source of definitions and do not have copies of all Microsoft Licence Agreements. We suggest that you do not rely on the information provided on the website. Unfortunately, if you ask to see the actual terms of the Microsoft Licence Agreement you may not receive the documents.


We started to compile this list of FAQs to assist Microsoft customers. As can be seen there are many gaps. We have therefore decided to provide a collection point for useful information on our website. If you would like to contribute resources to this site please go to http://proprietary.clendons.co.nz/.


If you are interested in establishing and contributing to a dedicated site to assist users of proprietary software, by assisting to answer complex licensing questions and provide information that businesses must considered prior to adopting or extending a closed source software business model, please contact the authors.


Craig Horrocks is a partner and Tony Miller a solicitor in Clendon Feeney’s technology law team. This article, together with further background comments and links to other web sites can be downloaded from www.clendons.co.nz. Questions and comments are welcome to techlaw@clendons.co.nz.