ISV Royalty Overview

Deliver your Unified Solutions to end-users with simplified licensing options through the Microsoft Independent Software Vendor (ISV) Royalty Licensing Program. This licensing program helps make it easy to deliver your business solutions to end-users by allowing you to integrate Microsoft products into other applications and then distribute the Unified Solution to end-users. For more information, please see the program details on the Microsoft Partner Network.

The Microsoft ISV Royalty Licensing Program is a worldwide software licensing program that offers ISVs a convenient way to license Microsoft products and integrate them into a software business application.

• Organizations that exclusively develop software or software solutions instead of being part of a computer system or being a hardware manufacturer.
• Organizations that obtain at least 30 percent of their overall revenue from the sales of licenses of that solution.

How ISV Royalty Licensing Works

The ISV Royalty Licensing Program is a worldwide software licensing program for all solution partner segments. You acquire licenses for your Unified Solution through a Microsoft Authorized Independent Software Distributor (“distributor”).

Avnet offers dedicated local support to the ISV product and service needs. Avnet are experts in Microsoft Licensing. Therefore, they are very useful in meeting reporting requirements and managing the licensing agreement, creating a one-stop shopping experience. The program offers access to a wide range of Microsoft licensed products. Please note the ISVR program does not include desktop operating systems, server operating systems, and online services.

Program Benefits
The following are some of the benefits of participating in the ISV Royalty Licensing Program.

• Deliver a total solution. Simplify procurement and deployment for your customers by eliminating the need to separately license the Microsoft products that are included with your solution.
• Reduce costs. Help reduce installation, configuration, update, and support costs by pre-configuring solution installation with Microsoft products.
• Potentially increase revenue. Create an additional revenue stream or increase margins by redistributing Microsoft licenses and Embedded Maintenance upgrade coverage with a Unified Solution.
• Worldwide distribution. Distribute a Unified Solution to customers in any part of the world where distribution is allowed.

Program Requirements
To participate in the ISV Royalty Licensing Program, you must:

• Develop a Unified Solution. Build a value-added solution that uses Microsoft licensed products and distribute the Unified Solution in a tangible media format.
• Enroll in the Microsoft Partner Network. Enroll in the Microsoft Partner Network (MPN) at any level.
• Complete the agreements. Complete the ISV Royalty License and Distribution Agreement and Microsoft Business and Services Agreement (MBSA).
• Submit the paperwork. Submit the ISV Royalty License and Distribution Agreement and credit application form to Avnet
• Meet all program requirements. Comply with the full program requirements as outlined in the ISV Royalty License and Distribution Agreement that you get from Avnet.

After you are accepted into the program, you will receive a welcome letter that contains information on how to get started—including how to order fulfillment media and how to register for the program’s online tools.

Product Key Activation
Some products require Volume License Keys (VLKs) to complete installation. The product key is assigned to a company or organization and must be used for desktop PC or administrator installations of products. To obtain an ISV Volume License Key and for a list of products that require VLKs, please contact your distributor.

Qualifying for Integration as an ISV
To qualify for integration with Microsoft products under the ISV Royalty Licensing Program, the ISV’s solution must add significant and primary functionality to the Microsoft product. This requirement may extend to software that the ISV acquires from third parties.

Integrating Microsoft products into a solution
An ISV can integrate Microsoft licensed products into their solution by including one or more Microsoft licensed products along with the ISV’s software comprising the unified solution and either:

• Copying onto physical media, which is labeled and packaged as the ISV’s solution,

OR

• Pre-installing, by the ISV, on a computer system for distribution as part of the ISV’s unified solution.

Program requirements for an ISV

• The ISV builds a unified, value-added solution that integrates Microsoft licensed products and distributes the solution in a tangible media form.
• The ISV incorporates any applicable Microsoft license terms into the End Customer Agreement for the unified solution.
• The ISV provides monthly reporting to their distribution partner on all Microsoft licensed products, which are included within their unified solutions. If there are no sales of the solution during a month, then the ISV submits a zero royalty report to their distributor partner.

How an ISV joins the program

Enrolling your ISV involves a few easy steps:

• The ISV completes an ISV Royalty License and Distribution Agreement and returns it to Avnet.
• Avnet submits the documents to the Microsoft.
• The ISV receives confirmation of enrollment via a welcome letter and access to the Avnet ISVR reporting portal.

Licenses Used in Program
The ISV default is a “full use” license that gives the ISVs and customers the ability to use Microsoft products with other applications, as long as they are still licensed for the ISVs application. Some products are also offered with an ISV Runtime License, which has more restrictive use rights. For example, the customer can only use the Microsoft licensed products with the ISV solution and cannot use the Microsoft products to run any other application or solution independent of the ISV solution with which the products were acquired.

Key Steps to Ensuring Participation
After an ISV is successfully enrolled in the program, the following will assist in ensuring participation and compliance in the ISV Royalty Licensing Program:

• Obtain master copies of software application(s) through Microsoft Worldwide Fulfillment by ordering them via MOET – Microsoft Order Entry Tool
• Ensure that the required Microsoft terms and End-User License Agreement (EULA) text are passed through to ISV end customers
• Schedule a post enrollment meeting to discuss business goals, product needs and review method in which (the distributor will report ISVs royalties due).
• Submit to Distribution a royalty report identifying the number of Microsoft application licenses distributed to customers within 5 days after the end of each calendar month.

Obtaining Volume Licensing Keys for Media
Most server products, such as SQL Server, do not require a separate key as it is embedded in the media. MBS products, such as CRM and some server products, have the VLK printed on the CD / DVD sleeve. For products requiring a Volume License Product Key, the CD will include the following text below the product name: (Volume Licensing Product Key Required).

The only products requiring VLKs under the ISV Royalty Program are desktop products, such as Project Pro, Visio Std and Visio Pro. To obtain their Volume License Keys (VLKs), contact Avnet.

Additional ISVR Program FAQs

Can ISVs in the ISV Royalty Licensing Program distribute Microsoft products as stand-alone products?
No. With the ISV Royalty Licensing Program, ISVs can distribute Microsoft products only as part of a Unified Solution. However, in some cases, ISVs can distribute additional licenses to a user if they have previously distributed the solution to the user.

Can ISVs integrate only a portion of the Microsoft product with their business solution?
No. Integration of a Microsoft product with their Unified Solution must include the entire product, not just a portion of the product. Based on the solution’s functionality, certain features might not be used (for example, development tools), but the entire Microsoft product must be integrated.

Can ISVs disable features of the product if the application does not use them?
Microsoft does not allow ISVs to disable any product features so that users receive fully functional product. In addition, disabling certain features might affect other parts of the product that would be detrimental to the software. However, ISVs may configure the software in accordance with its software documentation.

What types of licenses are used in the program?
The default is the ISV License, which is a “full use” license that gives users the ability to use the underlying Microsoft products with other applications as long as they are still licensed for your application. Some products are also offered with an ISV Run-Time License, which has more restrictive use rights—the user can use the Microsoft products only with the solution, and cannot use the Microsoft products to run any other application or solution independent of the solution with which the products were acquired.

Can ISVs deliver their Unified Solutions to users in other countries?
The ISV Royalty Licensing Program allows for worldwide distribution of the Unified Solution, subject to U.S. export laws and subject to certain agreement provisions. Because Microsoft does not exercise control over who ISVs distribute the Unified Solution to, ISVs are required to have agreements with all third-party business entities that they directly provide the Unified Solution to for distribution (and not for sublicense), directly or indirectly, to users.

What is the agreement term?
The agreement term is three (3) years. If ISVs change distributors during the agreement’s term, the three-year term commitment must still be met. If ISVs wish to continue in the ISV Royalty Licensing Program after the three-year term expires, they may re-enroll by signing a new agreement.

What is Embedded Maintenance?
ISVs can give users the option of upgrading to future Microsoft product versions by acquiring Embedded Maintenance for a fee. Only new product versions released during the Embedded Maintenance coverage period are included. Licenses must be enrolled in Embedded Maintenance when the license is originally acquired, and distribution rights apply to Embedded Maintenance as well as to the Microsoft products within the Unified Solution. Coverage must be renewed annually during the agreement’s term.

Can I offer Embedded Maintenance to users just for the Microsoft product?
No. The ISV Royalty Licensing Program allows you to sell and distribute Embedded Maintenance to your users for the Unified Solution.

How do users with licenses enrolled in Embedded Maintenance get the Microsoft upgrade product?
ISVs supply the Microsoft upgrade product to their users as part of an upgrade to the Unified Solution.

Who is the legal licensor under the ISV Royalty Licensing Program?
Under the ISV Royalty Licensing Program, Microsoft licenses its products to the ISV, not the end user. The ISV is the sub-licensor of the Microsoft product licensed to end users as part of the unified solution.

What is the policy for price changes?
Microsoft may decrease the price in the price list at any time. Microsoft may increase the price in the price list only (1) once each calendar year on January 1.

For more information on the Microsoft ISV Royalty Program, contact
Avnet's ISV Royalty team at ISVRoyalty@avnet.com or (800) 474-3044.