OEM Software

The case for OEM software is attractive. OEM stands for Original Equipment Manufacturer. This software was originally concieved as a discounted version of software that was bundled with hardware. Currently many businesses take advantage of the low costs of OEM versions of their software. For example, Office Pro is substantially less as an OEM product than even a Business License. For example, the OEM Office Pro costs about $400.00 when purchased with a PC and slightly less than $ 600.00 when purchased as a Business license. Of course, both of these is less than the $700.00 retail version.

The Trade-offs

What are the trade-offs? The license for an OEM product state that it must be retired when the hardware is retired. If you are upgrading your PC more often than every 2 to 3 years, you are going to have to rebuy the latest OEM version each time. If you are more conservative and keep the gear 4 to 5 years, you probably won't mind this as the latest version of the software will be much more current and theoretically more useful.

For example, Office 2003 has become the defactor standard in business as a word processor (Word 2003), spreadsheet (Excel 2003), and email client (Outlook 2003). If you bought a PC in 2003 with this software suite, you would have had to upgrade your Office suite on your next PC upgrade. The 2007 version is substantially different, and you would be forced to relearn it to take advantage of the new "features".

With software licensing, you have the rights to use earlier versions as part of the license. This can be very useful in larger companies, where changing a version is more ponderous and requires more organized training. In addition, version protection is often available on software licensing, so that you can use whatever the current version is when it comes out. Microsoft calls this Software Assurance, and it must be purchased at the same time as the license. The Software Assurance runs concurrent with the License Program, which is generally 2 years.

There are other license programs, such as the Value Program, where the Software Assurance runs three years. This program has the added option of the license payment being spread over the three years with three equal payments, with the two extra payments being due on the anniversary of the License program. Any re-orders are pro-rated for the same Software Assurance protection for the remaining years.