Reference
Microsoft licensing glossary
30 plain-English definitions of the terms you'll see on every product page, invoice and Microsoft activation prompt.
- OEM license
- Original Equipment Manufacturer license — sold with a pre-built PC and tied to that machine's motherboard. Cannot legally be transferred to a new computer once activated.
- Retail license
- Full Packaged Product key sold to end users. Transferable between machines: deactivate on the old PC, activate on the new one.
- MAK key
- Multiple Activation Key — a volume-license key with a fixed pool of one-time activations against Microsoft's activation servers. Used by businesses for offline or unmanaged machines.
- KMS
- Key Management Service — an on-premises server that activates volume-licensed Windows and Office clients in 180-day cycles. Requires 25+ Windows or 5+ Office clients to start counting.
- Volume license
- Microsoft licensing program (Open, MPSA, Enterprise Agreement) for organisations buying 5+ seats. Cheaper per seat than retail and managed via the Volume Licensing Service Center.
- CAL
- Client Access License — required for each user or device that connects to a Windows Server, SQL Server or Exchange Server. Sold per-user or per-device.
- LTSC
- Long-Term Servicing Channel — a Windows or Office release branch that gets only security updates for 5–10 years, with no feature changes. Designed for kiosks, medical devices and locked-down workstations.
- Click-to-Run
- Streaming installer technology used by Office 2016+ and Microsoft 365. Downloads a small bootstrapper that streams the rest of the suite and keeps it updated monthly.
- Office Deployment Tool
- Free Microsoft command-line tool (setup.exe) that installs Office with an XML config — used to pick architecture, channel, language and which apps to include.
- TPM 2.0
- Trusted Platform Module v2 — hardware crypto chip required by Windows 11 for secure boot, BitLocker and Windows Hello. Most PCs from 2018+ ship with one (sometimes called fTPM in BIOS).
- Secure Boot
- UEFI feature that only loads bootloaders signed by trusted keys, blocking pre-OS rootkits. Required for Windows 11 and recommended for any modern PC.
- BitLocker
- Full-disk encryption built into Windows Pro and higher. Uses TPM-bound keys so the drive is unreadable if removed from the original machine.
- Hyper-V
- Microsoft's type-1 hypervisor, included in Windows Pro/Enterprise and Windows Server. Runs Linux and Windows VMs natively without third-party software.
- Extended Security Updates
- Paid security-only patch program offered by Microsoft after a product's mainstream support ends. Available for Windows 10 (ends 2025) for up to three additional years.
- Always On Availability Groups
- SQL Server Enterprise feature for high-availability replicas of one or more databases across multiple servers, with automatic failover.
- Active Directory
- Microsoft's directory service that stores user, group and computer accounts for a Windows network. Runs on Windows Server with the AD DS role.
- Azure Hybrid Benefit
- Discount that lets organisations re-use on-premises Windows Server or SQL Server licenses with Software Assurance to lower the cost of Azure VMs.
- Microsoft 365 Copilot
- AI add-on that drafts content in Word, Outlook, PowerPoint, Excel and Teams using your tenant's Microsoft Graph data. Requires a Microsoft 365 commercial subscription.
- OneDrive
- Microsoft cloud file storage. Microsoft 365 Personal includes 1 TB per user; Family gives 1 TB to each of six users.
- Outlook
- Microsoft mail and calendar client. Included in Office Home & Business+ and every Microsoft 365 plan. The free 'New Outlook' Mail app replaces Windows Mail in 2024+.
- Windows Hello
- Biometric sign-in (face, fingerprint, PIN) built into Windows 10/11. Requires a TPM and either an IR camera or fingerprint reader for biometrics.
- Remote Desktop (RDP)
- Microsoft protocol for remote access to a Windows session. Hosting RDP requires Windows Pro/Enterprise or Windows Server (Home cannot host).
- Domain Join
- Adding a Windows PC to an Active Directory or Entra ID domain so it can use central sign-in, group policy and shared resources. Requires Pro or Enterprise.
- Core licensing
- Windows Server and SQL Server are licensed per physical core (with a 16-core minimum per server for Windows Server). Hyper-threading does not count — only physical cores.
- Perpetual license
- One-time purchase that lets you keep using a specific version of software forever. Office 2024 and Windows 11 are perpetual; Microsoft 365 is not.
- Subscription license
- Recurring fee that keeps software activated and updated. Stops working at feature-reduced or read-only mode when the subscription lapses (Microsoft 365 example).
- ESD delivery
- Electronic Software Delivery — your product key and download link arrive by email after checkout. The industry-standard digital fulfilment method since 2010.
- FPP
- Full Packaged Product — Microsoft's official name for retail boxed/digital licenses sold to end users. Transferable, not tied to hardware.
- OSE
- Operating System Environment — one running instance of Windows (physical or virtual). Windows Server Standard licenses two OSEs per server; Datacenter licenses unlimited.
- WSUS
- Windows Server Update Services — free role on Windows Server that centralises Windows and Office updates for a corporate network instead of every PC pulling from Microsoft.
Related guide: Retail vs OEM
Related guide: SQL CAL vs Core
Related guide: ODT walkthrough
Related guide: Windows 11 TPM bypass risks
Related guide: Enable BitLocker
Related guide: Windows 10 ESU explained