1. Early Beginnings (1975–1980s)

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  1975: Microsoft was founded by Bill Gates and Paul Allen.

  
  


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  1975–1980: Microsoft focused on BASIC interpreters for microcomputers. Licensing was informal; software piracy was common.

  
  


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  1980: Microsoft licensed MS-DOS to IBM for its personal computers. This was a pivotal moment — Microsoft retained the rights and licensed MS-DOS to other PC manufacturers, establishing a new model of OEM licensing.

  
  

2. Rise of Windows and Perpetual Licensing (1985–1990s)

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  1985: Release of Windows 1.0 — licensed to consumers and OEMs.

  
  


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  1990s: Microsoft began packaging products with End User License Agreements (EULAs) — granting users the right to use software, not own it.

  
  


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  Perpetual licensing became standard: one-time payment for lifetime use, often tied to a specific PC.

  
  

3. Volume Licensing and Enterprise Focus (Mid-1990s–2000s)

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  Introduction of Volume Licensing for businesses, including:

  
  
  
  
  
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    Open License

    
    
  
  
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    Select License

    
    
  
  
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    Enterprise Agreement (EA)

    
    
  
  
  
  


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  Microsoft Office and Windows became core components of enterprise IT environments.

  
  


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  Product Activation introduced (starting with Windows XP) to combat piracy.

  
  

4. Software Assurance and Licensing Flexibility (2000s)

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  Software Assurance (SA) introduced — a subscription add-on offering version upgrades, support, training, and more.

  
  


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  Licensing options became more complex to cater to diverse business needs.

  
  

5. Shift to Subscription and Cloud (2010s)

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  Office 365 (2011) launched — a major shift from perpetual licensing to subscription-based services.

  
  


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  Windows licensing also began evolving with Windows 10 as a service.

  
  


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  Introduction of Microsoft Azure and licensing for cloud infrastructure and platform services.

  
  


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  Microsoft began offering Hybrid Use Benefits for customers using both on-premises and cloud environments.

  
  

6. Modern Licensing & Microsoft 365 (2020s–Present)

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  Introduction of Microsoft 365, combining Windows, Office, and Enterprise Mobility + Security in a single subscription.

  
  


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  Emphasis on user-based licensing rather than device-based.

  
  


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  Transition away from perpetual licenses for Office (e.g., encouragement to move to Microsoft 365 instead of Office 2021).

  
  


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  Continuous updates and cloud integration became central.

  
  


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  Licensing tools and portals such as the Microsoft Admin Center help manage user and license assignments.

  
  

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Key Licensing Models Over Time

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  OEM Licensing – Tied to hardware (e.g., PCs).

  
  


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  Retail Licensing – Sold to consumers for personal use.

  
  


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  Volume Licensing – For businesses and educational institutions.

  
  


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  Subscription Licensing – Monthly/annual payment model (e.g., Microsoft 365).

  
  


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  Cloud Licensing – For Azure and other online services.

  
  

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