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OEM Software Explained in Simple Terms

OEM software comes in different forms, including CD.

OEM software comes in different forms, including CD.

I’m sure you’ve heard of software being referred to as an OEM before. OEM stands for Original Equipment Manufacturer and ultimately it is software that comes pre-installed with hardware such as desktops, laptops, printers and cameras. This is still a licensable application, but there are different terms and conditions associated with them.

Examples of OEM Software

OEM software can range from full-featured applications like operating systems or limited versions of software that try and entice the end user to purchase the full version. Examples include:

  • Operating system pre-installed on a machine
  • Photo editing software that comes with a camera
  • Recording editing software that comes with a microphone
  • Tablet software
  • Scanner/printer/photocopier software

The most common form of OEM software is the software that comes with a device. It is worth noting that a lot of OEM software that comes with a device can be downloaded from the vendors website, should the user lose the disk or drivers that enable them to use the device or software.


License Metrics

OEM software is primarily device based, which means the license is locked to the device that it is provided with. Always remember that the OEM license lives and dies with the hardware it came pre-installed on (if it is provided in that way). However, for other OEM based software such as OEM software that comes with a camera or MP3 device, it is possible to re-install the software on a new device, as long as you can connect said device to your computer.

In recent times, the software that comes with printers, cameras, MP3’s and other physical devices (not laptops or desktops) has been made free for anyone to use. Customers now have the option to download the software straight from the vendors website, with the vendor not monitoring or regulating whether or not the user has the device in question. That form of software is called freeware.


Hardware Changes

Should there be a requirement to make changes to your hardware or its components excluding the motherboard then you can do so while maintaining your Microsoft OEM Operating System license, for example.

If the motherboard has been upgraded or replaced for a different motherboard for performance or any other reason (other than it is broken) then you will require a new Operating System license as you have effectively created a new machine. As we know, OEM operating system licenses cannot be transferred.

If you are required to change the motherboard due to a defect then you do not need a new operating system license as long as the replacement motherboard is the same make and model as the original, or is the same manufacturers equivalent should the original motherboard no longer be available (check your warranty for your replacement options).


Transfer Rights

It’s simple; you cannot transfer OEM software to another machine under any circumstances. It doesn’t matter if the original hardware is no longer in use, or is going to be retired (as part of the Hardware Asset Lifecycle) you may not use the license on another machine. OEM software lives and dies on the original machine it is installed on. It doesn’t matter how many users use the OEM license, as long as they use it on the device it was installed on.



The main risks associated with OEM software come when the software is pre-installed on desktops or laptops by a hardware provider or a reseller. Firstly, the provider of such services must be fully research and verified before an organisation enters into an agreement with them. There could be all sorts of non-compliance and breaches of copyright going on, so make sure that the hardware and software that you will be receiving is legitimate and licensed in the correct way.

The next risk is non-compliance or breaking the terms and conditions of usage. Without the correct processes and policies in place, and without IT Staff knowing what an OEM license is, there is the potential for the license to be moved around or recycled when that is strictly against the terms and conditions of the license agreement. Auditors will come down on organisations miss-managing OEM software just as much as any other form of software.

If there are concerns over the management of OEM licenses, then the SAM manager could manage the license via their SAM tool. Creating an OEM license (it may be a custom feature) and assigning it to the device in question, whilst clearly highlighting the fact that it is an OEM license, is an easy and effective way of managing OEM licenses.



It’s hard to avoid using OEM software. The majority of devices/equipment comes with its own OEM software that must be installed on a device for compatibility issues. As long as the right processes are in place, and there is some form of license management system within an organisation then OEM software shouldn’t cause too much of a headache.


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About David Foxen

David Foxen is a Software Asset Management expert and enthusiast. He had a vast experience of successfully implementing SAM, SAM tools and also made huge cost savings. A member of the ISO Standards WG21, David is a massive ITAM geek, so uses any opportunity to talk about the subject to who-ever will listen. He believes that the industry needs to share its knowledge and success stories to help the SAM industry mature and become more effective. Always willing to help, his primary goal is to make a difference to organisations and the SAM industry so everyone will know how epic SAM is!


  1. Jason Keogh says:

    OEM software is also often found bundled with other applications. For example, SAP can provide you with an Oracle license underpinning their product – this is considered to be an OEM relationship (although Oracle use the phrase ASFU – Application Specific Full Use). The user has an SAP license, which in turn encompasses an Oracle DB license – this is a common use case for OEM software. Another example from my recent past is iQuate which uses Qlikview as a BI tool within iQSonar – the Qlikview license is an OEM licenses bundled with iQSonar.

    IBM bundle WebSphere AS and DB2 licenses with several products (for example Cognos) – this type of Bundling is also referred to as OEM.

    OEM goes way beyond software bundled with hardware – it is also software bundled with other software… making it even more complex as the use rights associated with the OEM software are restricted to use within the context of the licensed software.

    It is crucial to understand this software:software OEM structure, particularly in server environments where mis-counting the license requirements for an Oracle DB or similar can cost a significant amount of money.

  2. Noel says:

    Just to add to the paragraph on ‘Transfer Rights’. I understand that most vendor’s LA terms do not permit separating the OEM software from the hardware; however, back in 2000, the German ‘Bundesgerichtshof’ (Germany’s Federal High Court) ruled against Microsoft in so far as its OEM T&C’s were not compliant with the German Exhaustion Principle. In short, the German court ruled that hardware and OEM software can be separated and sold as a standalone product. I am not aware of a UK company doing it but I know of at least two German companies that are flourishing in this sector.

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