What does the Office 365 Small Business Premium "1 User/5 PCs" actually mean?

For the past year, we used four Microsoft Office 365 Small Business Licenses for four users, each with their own Office 365 accounts logged into their machines.

Those licenses expired in the beginning of August and we were preparing to renew them. However a colleague found a supposedly better deal: a vendor offering an Office 365 Small Business Premium 1 User/5 PCs license, claiming it can be installed on five PCs at a much lower price than the licenses we were buying straight from Microsoft.

We added the "super cheap" license to our Office 365 service, assigned it to an account, and configured our previous four machines, used by four different people, all using that same account.

I understand the "1 User/5 PCs" means that "one person can use it with his own account on five different computers." Therefore our current deployment would be violating the license agreement. But I can't find any documentation supporting this. The closest I could get was someone saying in this Microsoft Office forum post that a support person from Microsoft stated this, but without any supporting document either.

Does anyone has a clear description of how are we entitled to use these licenses?

Solution 1:

Microsoft's licensing requires each user to have their own license regardless of the number of devices on which they activate the software.

According to the Microsoft Online Services Terms^* which includes licensing terms for Office 365 Applications, a subscription license ("User SL") is required for each user:

A User SL is required for each user that accesses the Online Service unless specified otherwise in the Online Service-specific Terms.

^{source: Microsoft Online Services Terms, page 4}

The "Online Service-specific Terms" are found later in the document and confirm individual users are granted five concurrent software activations:

Each user to whom Customer assigns a User SL must have a Microsoft Account in order to use the software provided with the subscription. These users:

• may activate the software provided with the SL on up to five concurrent OSEs for local or remote use;
• may also install the software, with shared computer activation, on a network server or Microsoft Azure Platform Services and use the software to create, edit, or save documents. For the purpose of this use right “network server” means a physical hardware server solely dedicated to Customer use. This shared computer activation provision does not apply to Customers license for Office 365 Business; and
• must connect each device upon which user has installed the software to the Internet at least once every 30 days or the functionality of the software may be affected.

^{source: Microsoft Online Services Terms, page 19}

^{*Also available from the Microsoft Volume Product Licensing site}