Microsoft license types and activation methods explained (Windows and Office)

Understanding Microsoft license types and activation

➡️ Microsoft license types

Microsoft offers several types of licenses for Windows and Office, each with different rules on activation, transfer, and usage. Understanding these categories helps you select the right license for your needs  whether you are a home user, business, or organization.

➡️ Digital licenses (ESD)

Digital licenses, also called Electronic Software Delivery (ESD), are distributed online and delivered directly to your email. They are fast, convenient, and eliminate the need for physical packaging.

• Windows: often used for upgrades or digital purchases from Microsoft Store.
• Office: standard for online purchases, delivered with a download link and key.

➡️ Retail licenses

Retail licenses are the most flexible option. They can be deactivated on one device and reactivated on another.

• Windows: transferable if you replace your PC or upgrade hardware.
• Office: can be installed on a new device after removing it from the old one.

Activation is done online or by phone.

Intended for: general consumers, small businesses, and public sector users.

➡️ OEM licenses

OEM (Original Equipment Manufacturer) licenses are preinstalled on new devices or sold together with hardware.

• Windows: tied to the device on which they are first activated; not transferable.
• Office: behaves the same, though some OEM licenses of the NON:SLP type can be transferred if conditions are met.

Activation is done online or by phone.

Intended for: device manufacturers, end users purchasing new PCs, and organizations buying preconfigured hardware.

➡️ Volume licenses

Volume licenses allow activation of multiple devices using a single key. They are designed for organizations rather than individuals.

• Windows: uses MAK (Multiple Activation Key), KMS (Key Management Service), or Active Directory activation.
• Office: uses the same methods in enterprise environments.

These licenses simplify management for IT departments and ensure compliance across many devices.

Intended for: companies, schools, and public institutions.

➡️ MSDN keys

MSDN (Microsoft Developer Network) keys are provided to developers for testing purposes. They are not intended for commercial sale or general consumer use and can expire without notice.

➡️ Activation methods

Once you have a license, Windows and Office require activation. Microsoft offers several activation methods depending on the license type.

➡️ Bind keys

The most common method is online activation. When you redeem a product key, it becomes bound to your Microsoft Account. This makes future activations easier, since reinstalling or moving to a new device only requires signing in.

• Used for: Retail and ESD licenses.

➡️ ISO keys

The term ISO key usually refers to a license key distributed together with an ISO installation file of Windows or Office. The ISO is a digital installer; after installation, you activate the product with the included key.

• Common for: IT deployments, reinstallations without physical media.

➡️ Phone activation

If online activation is unavailable, you can activate by phone:

1. Windows or Office generates an Installation ID.
2. You call Microsoft’s automated activation center.
3. Microsoft provides a Confirmation ID.
4. Enter the Confirmation ID to complete activation.

• Available for: Retail, OEM, and Volume licenses.

➡️ Types of illegally traded software

Alongside genuine Microsoft licenses, there are product keys in circulation that are not legitimate or not intended for resale. These include:

• Fake digital licenses – random sequences of characters that look like keys but cannot activate Windows or Office.
• Misused retail, OEM, or volume keys – sold without invoices or proof of purchase, often in violation of Microsoft’s terms.
• KMS activators – unauthorized programs that simulate activation; not official Microsoft methods.
• MSDN keys resold – developer testing keys offered for sale even though they are not consumer licenses.

💡 Frequently Asked Questions (FAQ)

Understanding Microsoft license types and activation

🔸 Can I transfer a Windows OEM license to another computer?

No. A standard Windows OEM license is tied to the first computer it is activated on and cannot be transferred. Only retail and some special OEM NON:SLP licenses can be reactivated on new hardware.

🔸 How many devices can I activate with a Microsoft Office retail license?

A retail license is generally valid for one device at a time, but you can deactivate it on one device and activate it on another. For multiple devices, a volume license or Microsoft 365 subscription is required.

🔸 What happens if I reinstall Windows or Office on the same computer?

If you are using a digital (ESD) or retail license linked to your Microsoft Account, you can simply sign in to reactivate after reinstalling. For OEM licenses, activation is usually automatic on the same hardware.

🔸 Can I use phone activation if online activation fails?

Yes. Both Windows and Office support phone activation. The system generates an Installation ID, which you provide to Microsoft’s automated service to receive a Confirmation ID for activation.

🔸 What is the difference between Retail, OEM, and Volume licenses?

• Retail: transferable between devices; intended for individuals and small businesses.
• OEM: preinstalled on new PCs; tied to the first device; not transferable.
• Volume: designed for organizations; allows activation of multiple devices with one key.

🔸 Are MSDN keys valid for everyday use?

No. MSDN keys are intended for developer testing and are not valid for consumer or business use. They may expire or be revoked at any time.

🔸 What is a digital license (ESD)?

A digital license, also known as ESD, is delivered electronically via email. It requires no physical packaging and is activated online. This is the most common method for purchasing genuine Windows or Office today.