OEM, retail and volume licensing: what's the difference?

The three licence types

OEM, retail and volume licensing are three distribution channels for the same software, with different rules for transfer and support. Windows and Office are sold through several channels. The software itself is identical, but the licence terms differ. The three main forms are OEM, retail and volume. The distinction determines whether you may move a licence to another computer, who provides support and who each channel is intended for.

• OEM (Original Equipment Manufacturer): supplied with a new computer and tied to that device.
• Retail: sold separately to the end user and tied to the user rather than to one device.
• Volume: intended for organisations, with one agreement to activate multiple devices.

The rest of this page explains each channel, compares them in a table and shows how to check which type you have using a command. That way you can quickly determine whether a licence is transferable and whether it fits your situation.

The distinction is not just a matter of price. It determines whether you can move a purchase later, who you can turn to when problems arise and whether a key on offer is permitted for your situation. Mixing up the three channels can lead to buying a licence that technically works but does not match the intended use. It therefore pays to know in advance which type you need.

OEM licence

An OEM licence is tied to the device on which it was first activated. OEM licences are supplied with a new computer or sold separately to system builders. They are cheaper than retail because they are tied to the device rather than to the user.

The key characteristics:

• Tied to the hardware: the licence belongs to the computer on which it is first activated, in practice linked to the motherboard.
• Not transferable to another PC: you may not move an OEM licence to a new computer. If you replace the motherboard, activation usually lapses.
• Support via the manufacturer: support is provided by the computer supplier, not directly by the software maker.
• Reinstallation on the same device: you may reinstall and activate on the same machine.

OEM is the cheapest route and suits anyone who uses a licence on one fixed machine and does not want to move it later. The risk lies in a major hardware change: with a new motherboard, activation may be lost.

On modern Windows PCs the OEM licence is usually stored as a digital licence in the motherboard firmware. During a clean installation Windows recognises that licence automatically, so you do not need to enter a key. That is convenient, but it underlines the link to the device: the licence lives in the hardware, not in a key you can take with you.

There is a distinction between two forms of OEM. The classic, preinstalled variant belongs to a branded PC and support is provided by that manufacturer. In addition, there is the System Builder variant, intended for people who build their own computer and activate the licence on that self-built machine. In both cases the principle remains the same: the licence belongs to that one system.

Retail licence

A retail licence is tied to the user and may move to another computer. Retail licences are bought separately, in a box (Full Packaged Product) or as a digital download (ESD). They are more expensive than OEM but offer more freedom.

The key characteristics:

• Tied to the user: the licence belongs to you, not to one device.
• Transferable: you may remove the software from one computer and install it on another. Deactivate on the old machine and activate on the new one.
• Support via the software maker: you are entitled to support directly from the maker.
• Multiple hardware changes: a new motherboard or a new PC is not a problem, provided you use it on one device at a time.

Retail suits anyone who changes computers regularly or wants to be able to take the licence along. The higher price pays off in flexibility and direct support.

A retail purchase comes in two forms: a physical box with a key card, or a digital download (ESD) with a key delivered by email or in your account. In substance they are the same; only the delivery method differs. For retail Office versions there is often also a limit on the number of simultaneous installations, where you release the activation from an old device before activating on a new device.

The core difference from OEM is important: with retail you are paying specifically for the right to move the licence. If you replace your entire computer, you take the licence with you. That makes retail more expensive, but also more future-proof for anyone who regularly buys new hardware.

Volume licence

A volume licence lets an organisation activate multiple devices under one agreement. Volume licences are intended for businesses, schools and institutions that manage many installations. Instead of entering a key per device, an organisation works with one agreement and central activation.

There are two common activation methods:

• MAK (Multiple Activation Key): one key activates an agreed number of devices; each device activates once with the maker's servers.
• KMS (Key Management Service): devices activate against a server within the organisation's network and renew that activation periodically.

Volume licensing is characterised by:

• Multiple activations: one agreement covers many devices.
• Tied to the organisation: the licences belong to the institution, not to an individual user or buyer.
• Not transferable on change of ownership: you may not resell volume licences with a device or transfer them to people outside the organisation.
• Central management: activation and compliance are managed centrally, often by a system administrator.

Volume is not intended for home use. The model revolves around scale and central management, with terms that suit an organisation rather than an individual buyer.

The difference between MAK and KMS determines the management. With MAK each device activates once directly with the maker, which suits machines that rarely connect to the internal network. With KMS the organisation runs its own activation server; devices report to it and renew their activation periodically. If the KMS server is unavailable for a long period, activation on the clients lapses until they reconnect.

Volume licences are taken out under an agreement, of which several types exist for different organisation sizes. Such an agreement usually includes additional rights, such as using an older version instead of the newest. Those terms are part of the contract and cannot be traded separately, which immediately explains why you cannot simply use standalone volume keys as a private individual.

Overview and comparison

The three channels differ most clearly in transfer, support and target audience. This table sets out the key characteristics side by side.

The essence: OEM is cheap but device-bound, retail is more expensive but movable, and volume is for organisations with many installations. What happens when such a licence or the associated subscription ends is explained in what happens when your software licence expires.

Checking the licence type

Use slmgr to check which licence channel is active on a Windows PC. On Windows you can read the licence type with the command-line tool slmgr. Open Command Prompt or PowerShell as an administrator and use these commands:

slmgr /dli     shows a short summary: edition, part of the key and status
slmgr /dlv     shows detailed information, including the channel
slmgr /xpr     shows whether and when the licence expires

In the output of slmgr /dlv there is a line that indicates the channel. The value tells you which type it is:

• RETAIL in the description indicates a retail licence.
• OEM in the description indicates an OEM licence tied to the device.
• VOLUME_KMSCLIENT or Volume:MAK indicates a volume licence.

This check is useful before you transfer a computer or buy a second-hand machine. Once you know which channel is active, you immediately know whether the licence is transferable. The full set of slmgr options and activation itself are covered in activate Windows with slmgr. The official explanation of the licence terms can be found in Microsoft's licensing documentation.

Assessing cheap keys

With cheap keys the channel determines whether your purchase is usable and permitted. Keys appear on marketplaces at prices far below the shop price. The channel often explains both the low price and the risk:

• Standalone OEM keys: an OEM licence belongs to the device on which it was originally activated. Offered separately and used on another machine, it does not fit within the terms.
• Volume keys as a standalone product: volume licences belong to an organisation and an agreement. A standalone volume key for a private individual does not belong there and may be invalidated during a compliance check.
• Region-bound or bundled keys: some cheap keys are intended for another region or another package and therefore do not work as expected.

The lesson is not that every cheap key is wrong, but that the price is rarely unrelated to the channel. Therefore always check which type of licence you are buying and whether that channel allows your use. A key that activates technically is not automatically a key you may use under the terms.

Which is right for you?

Choose OEM for a fixed PC, retail for flexibility and volume for an organisation. The right choice follows from how you will use the licence:

1. Fixed computer, lowest price: choose OEM if you use the licence on one machine and do not plan to move it.
2. Changing hardware or retaining support: choose retail if you want to be able to take the licence to a new PC or want direct support.
3. Many devices within an organisation: choose volume if you centrally manage many installations.

Pay close attention to the channel with a strikingly cheap offer. An OEM licence that belonged to an old computer is not separately transferable to your new machine, and standalone volume keys belong to an organisation and not to a private buyer. Therefore check the licence type before you buy, so you do not pay for a key you are not allowed to use.