Understanding the Different Windows XP Licenses

In a recent article I talked about the essential skills needed for basic residential computer repair work and one of the skills I mentioned was understanding Windows Licensing.

I touched on the topic a little bit in an old article about how to determine what type of license key/cd you have but didn’t go into it very deeply. In this article, I will tell you the differences between each Windows XP license in greater detail.

OEM (Original Equipment Manufacturer)
OEM licenses for Windows XP are generally cheaper to buy than the retail version but OEM’s must be sold in conjunction with internal computer hardware. Typically, you will see OEM copies of Windows XP sold with new computers.
OEM copies usually come in a flat, shrink wrapped paper CD holder with a cardboard backing and will say something like “Only for distribution with a new PC” on it. Additionally, OEM versions are intended to be supported by the system manufacturer rather than Microsoft.

Do not sell OEM copies of XP without internal hardware like a motherboard or hard drive. Microsoft do pursue this and often bait computer businesses so they can fine them.

A OEM copy of Windows XP will only accept OEM Windows license keys.

If the disk is branded with a brand name like HP, Compaq or Dell it is most likely a OEM copy. The Windows XP case will say something like “For use on new (brand name) computers only” and the license sticker will usually have the brand name of the manufacturer on it. Other than the visual differences on the CD, license sticker and the “System Properties” area of the computer; They are identical to OEM copies.

There are two licences for Retail versions of Windows XP. One is “Upgrade” and the other is “Full Purchase Product (FPP)”.
Retail versions of Windows XP are often sold at big box computer stores where anyone can buy one off the shelf. The Full Purchase Product usually cost more than OEM versions and you usually don’t get a sticker to put on the computer case. Instead, they provide a sticker remains on the Windows XP CD case. Microsoft only provides 90 days of support for the retail version.

To use the “Upgrade” version, you must have a working version of Windows to upgrade from. For XP Home it can only be Windows 98, 98 Second Edition or Millennium Edition. For XP Professional it can only be Windows 98, 98 SE, ME, NT or 2000 Professional.

A Windows XP OEM CD key will not work with a Retail CD and vice versa.

Volume License
Volume License versions of Windows XP are provided to businesses under a purchase agreement with Microsoft. Volume Licenses use “Volume License Keys (VLK)” and provide the ability to use a single key for multiple systems and it does not require activation for each computer.

Of course, this lead to mass piracy and most pirate versions you will find are most likely be a Volume License version. However, when installing Service Pack 1 or Service Pack 2, it checks your license against a known database of pirate Volume License keys and will not install the service pack if it detects the key to be pirate.

There are three Volume License flavors: Open License, Select License and Enterprise Agreement. You can be an Open License customer with as few as 5 licenses. Select and Enterprise require at least 250 desktops each.

There are versions of Windows XP that are known as a “Corporate Licenses”. These still fall under the same rules as a Volume License.

I have heard that Corporate Licenses needs to be activated once, but only once. Meaning you must activate it on the first computer you install it on, but you can then install it on hundreds more without activation. However, I haven’t been able to confirm this.

Volume License keys are not interchangeable with Retail or OEM versions of Windows XP.

Bryce Whitty

About the Author

Bryce Whitty
More articles by me...
Bryce is an Australian computer technician and the founder of Technibble. He started his computer repair business when he was 17 years old and is still running it 9 years later. He is an avid traveller and spends at least a month of the year in another country.

Comments (16)

  • Jaime Rosario says:

    My experience with the “Corporate License” is that no matter the computer manufacter, model, or hardware difference between one to another, the license will be activated and working.

  • Jeremy says:

    Does anyone happen to know a good place to buy VLKs? I’d like to purchase one for XP (and possibly Windows 7 when it’s released) for a school district, but after searching Microsoft’s site, they only link to their partners.

    I assumed going to their partners’ websites would give me pricing information, but they’re all informational sites that aren’t set up for any kind of purchasing whatsoever. It’s a giant pain in the neck.

  • techie says:

    I like the way vista licensing works. All the disks are the same and will accept any kind of key. 32-bit and 64-bit disks are different but they accept the same keys. You can use your 32-bit key to install the 64-bit version of vista.

    If you have a Retail disk it will accept OEM keys and vice versa. Setup will install the correct version (Basic, Premium, etc.) depending on the which key you use. This means I only need to carry one version of vista in my toolkit because it will accept any key I encounter.

    I also like that vista will install a 30 day trial if you skip the key entry step in setup. This is nice for temporary virtual machines.

  • yourpcbytes says:

    I have found that most my customers have missplaced their OEM disks, but thats ok because when using a Retail version of say “XP Pro” and when entering their OEM key on the side of their PC it installs just fine. I’ve done this on hundreds of pc’s with only an issue with one of two of them. I did however try to use an OEM CD with a Retail key which didn’t work.

    I also run into having to do this when customers hard drives have been widely corrupted or die out completely, in which they have also lost the recovery partition. (smart idea on part of the OEM manufacturers right!?)

    Anyone else had this work for them?

  • StarFightr says:

    In my experience, OEM CDs won’t accept Branded Keys…

  • Votre says:

    That warning about never selling an OEM copy of XP without also selling internal hardware such as a mobo or hard drive is spot on. I know of two repair shops in my area that have been bagged by Microsoft for doing that.

    I happen know one of the shop owners personally. He wouldn’t go into any details about what went down between him and Microsoft; but from what little he did say, I gather it was a very unpleasant experience for him.

    Forewarned is forearmed.

  • LRH says:

    I would find an article Discussing what you can and can’t get away with when it comes to Microsoft licensing. They are very black and white… but what about:

    Example: XP license label out of lease equipment you purchase.

    Example2: Hardware re-fresh upgrade and re-using license for win xp or office. If you wipe old no harm done, but MS wont agree.. can you get away with it.

    I have purchased software and it has actually come with useless hardware (hard drive platter for example). I wounder if that would hold up against MS.

  • JoeTech says:

    I have purchased OEM versions of XP from the third and fifth largest vendors in the eastern US and they send a sound cable if I am only ordering software. I know these companies would not do anything out of line with MicroSoft eula Policy.

  • Mark Thompson says:

    If I know the client’s computer was sold with a legal version of XP or was upgraded using a retail upgrade
    for whatever reason the necessary install CD or recovery CD is unavailable.
    and I have a copy of a CD that I have used in the past and the resulting installation always passes the WGA and always allows for upgrades

    I guess I feel that restoring their system with that CD is preferable to forcing them to buy a whole new retail copy.
    A long as I am upfront with the client.
    While cheating Microsoft out of there $ is unethical a customer having to pay for the same piece of software twice is equally unfair and if Microsoft does not offer a viable way to protect the customer from this double charge than it is not unethical to provide such a path.

  • Ron says:

    “While cheating Microsoft out of there $ is unethical a customer having to pay for the same piece of software twice is equally unfair and if Microsoft does not offer a viable way to protect the customer from this double charge than it is not unethical to provide such a path.”

    I have a huge issue with software companies for that very reason.

    If I am not purchasing the software, but am only purchasing the licensing to us it, then I think sending out one replacement CD free (and then a small charge for any additional copies of the same version) should be done. The problem is when it becomes legacy software and isn’t supported by the company anymore, which is wrong. If I bough version 4.5 and you are on version 10, ok, I get “no support”, but just give me the version of the software on the disk that I need to use the license I paid for the right to use.

    IF they won’t do that, then I did not buy the right to use it, I bought the software. Of course their lawyers have the EULA written to cover all of this and state that support is only for so long, etc etc etc.

    This is yet one more reason why I switched over to Linux on my own systems, and encourage others to do the same. IF they still want to stay with Windows, then I encourage them to use the free software alternatives to commercial/proprietary software.

  • tekgeek says:

    I personally have been buying OEM versions of windows since the early 90’s from computer stores around San Diego California and have never had to buy any other hardware to go along with it ..

    I have never had to pay more than 90 bux for a copy.

  • Fahad says:

    I have never had any problems with different versions of XP or Vista etc cause I can only buy pirated copies of OS from the market. Originals are nowhere to be found here. :P

  • Jim says:

    I’m wondering about upgrades.
    If running an open license copy of WinXP x64 and you purchase a retail upgrade of vista 64 bit or windows 7, will it install ok even though the previous version was an open license version?

  • “A Windows XP OEM CD key will not work with a Retail CD and vice versa.”

    Not true. The CD’s or DVD’s just look for a matching version and a legitimate key. The only funky ones I know of are most of the XP disks that come with SP3, and those new batch of licenses. They do not have the algorithm that recognizes older keys. And of course older disks do not recognize the newer keys that use the new algorithm.

  • Kayden says:

    What about an open license? i know what it is, but you forgot to add that.

  • Russel says:

    I have never read the agreement on OEM and buying hardware, but from what I heard I thought is was supposed to more significant hardware eg Motherboard and CPU.

    It makes sense as upgrading hard drive hardly warrants a changed computer.

    Although if anyone knows for sure please correct me after all getting away with OEM at the lowest possible hardware upgrade cost makes it easy to sell our customer OS upgrade or if things do go pear shaped and customer needs new OS getting a bigger hard drive and a new OS is a win win for customer rather than just forking out for Full Retail.