With the release of Windows 10, we're resurfacing our explanation on Microsoft's unique licensing and update structures for its new OS. This piece originally ran on January 30, 2015, but we believe the information remains valid within 24 hours of the Windows 10 release.

Windows licensing is more or less straightforward in the consumer sphere. Oh, sure, there are complications surrounding self-built systems, but compared to the world of enterprise licensing, the range of options is limited and the pricing simple. Corporate licensing, however, is a whole other matter.

We've been saying for some time that the process of updating and upgrading Windows is going to change in Windows 10, and perhaps unsurprisingly, this is going to have implications for Windows licensing.

The underlying theme is this: Microsoft does not want the Windows market to be split between a bunch of different versions. For a brief period, Windows XP, Windows Vista, Windows 7, Windows 8, and Windows 8.1 were all both extant and actively supported Windows versions. This is bad for more or less the entire Windows world. It's bad for developers of Windows software because they're forced to choose between the best functionality (found in Windows 8.1) or the widest compatibility (target Windows XP). It's bad for Microsoft, because it has to support all these versions. It's bad, in many ways, for end-users, too; using old versions means that they don't get the latest features, and in the case of Windows XP, they don't even receive security updates.

For a long time, however, Microsoft's policies encouraged this very proliferation. Most non-corporate Windows users never really buy a Windows license. They buy a PC, and the PC's manufacturer has paid for the license. If those users want to use a newer version of Windows than the one that came with their PC, they have to shell out for an upgrade, or buy an entirely new PC. While a minority do indeed buy the upgrades, the majority do not. They only get a new version of Windows when they buy a new PC, and with PC lifetimes comfortably reaching five or six years, that means that old versions of Windows stick around for a long time.

Windows 10 is changing that. As announced last week, current users of Windows 7, 8, and 8.1 will be able to upgrade to Windows 10 for no cost. Microsoft says that this will be a limited time offer that will run one year from the release of Windows 10; we honestly wouldn't be tremendously surprised to see that limited time offer extended.

Subsequently, and in some ways even more importantly, those new Windows 10 machines will continue to receive updates "for the lifetime of the device—at no cost." Those paid major version upgrades that Windows has historically had will be going away; once you're on the Windows 10 train, you're on the Windows train, and you'll continue to receive a steady stream of updates and upgrades until your system stops working and you buy or build a new one.

The effect will not be instant, but in the longer term, this should stop the fragmentation currently found in the Windows world. For home users in particular, there will be little incentive to stick with old versions of Windows. It's likely that keeping current won't even require any active decision on the part of the user; Windows Update will simply grab the upgrades as they become available and quietly install them. This is, of course, a big change for Windows, but for anyone who uses a smartphone, it should be a familiar experience: this is how iOS, Android, and Windows Phone already handle updates to their apps. Windows 10 will merely extend this to the operating system.

With this continuous stream of updates and the ability to perpetually run "the newest Windows" at no incremental cost, the nature of Windows updates and development is changing, too. New features and capabilities will no longer be held back until "the next major release of Windows;" they'll be downloadable as soon as they're ready for the mass market.

This sounds like a major shift for Microsoft's business, but it shouldn't be. People will still buy or build new PCs, and those new PCs will still need Windows licenses. Those Windows licenses will, for the time being, still cost money. What Microsoft is forfeiting is not Windows license revenue in general, but rather, upgrade license revenue. Since upgrades were never a major revenue source in the first place, the impact of this change shouldn't be too significant.

Accordingly, the free upgrade to Windows 10 should make consumer Windows licensing simpler and more straightforward. There won't be any more upgrade licenses, and once a machine has Windows 10 on it, it'll be good for life.

One important Windows demographic will, however, recoil in horror at the thought of a continuously updated world of Windows: the enterprise. How will this new approach to Windows development and deployment work for enterprises? Microsoft has revealed more details of its approach today.

For those mission critical systems that simply cannot change without rigorous testing and validation, Microsoft is introducing what it calls Long Term Servicing (LTS) branches. These branches will be the most stable, unchanging Windows versions that Microsoft has ever made. Today, Windows' support is split into two five year periods: a "Mainstream" period during which both feature improvements and security fixes are made, and an "Extended" period during which only security fixes are made. The LTS branches will receive only security and critical fixes over the entire ten year support duration. Even during the Mainstream support phase, there will be no new features.

New LTS branches will be created periodically, integrating all the feature updates that have been developed in the interim. Microsoft will support updating LTS version N to both version N+1 and N+2, so corporations that want to move slowly will be able to skip alternate updates.

However, this will not be the preferred solution for most corporate systems, as Microsoft argues that most systems don't need this level of immutability. For those systems there will be the "Current branch for Business" (CBB). The CBB will broadly keep pace of consumer Windows, receiving a steady mix of security updates and new features. However, it will give administrators the power to hold back those feature updates to enable testing and validation, without interrupting the deployment of security fixes. Microsoft's intent is that CBB customers will delay deployment of new features by perhaps a few months, but in broad terms will keep pace with consumer Windows.

Windows 10 systems will also be able to switch between CBB and LTS.

This terminology is suggestive that perhaps Windows 10 will be the name forever. Microsoft isn't saying that there will be new major versions of Windows each with their own name going forward, just a bunch of branches of Windows 10. This would be consistent with the company's stated goal of making "What version of Windows are you using?" a meaningless question. The "10" may hang around as a vestigial remnant of Windows' past, but eventually most people will just be on "Windows" with a minority on, say, "the 2016 LTS branch."

The licensing implications for corporate users are a little stickier than those for home users. Companies using regular Windows or Windows Pro, as many small businesses do, will be eligible for the free upgrade. For them, the story should be substantially the same as it will be for home users; hardware will ship with an OEM license, and that will keep them up-to-date for the lifetime of that hardware.

Users of the Enterprise SKUs, however, will not be eligible for the free licenses. For many, this won't be an issue. Organizations with a current Software Assurance agreement will be able to upgrade regardless, because that's one of the big advantages of having a current Software Assurance agreement: you're entitled to use any new versions that are released over the two or three year lifespan of the agreement. Most Windows Enterprise users should be covered by such agreements.

This will be subject to the usual Software Assurance limitations; if the agreement expires on June 30th and Windows 10 is released on July 1st, there is no right to upgrade. That's how SA upgrades have always worked, and how they'll continue to work.

However, some users will fall between the cracks. Organizations that have not renewed their SA agreements will not be entitled to upgrade; they'll be frozen on Windows 7, 8, or 8.1 Enterprise. Further, organizations that do not have an SA agreement at all will also not be entitled to upgrade.

Before March of last year it was difficult to find oneself in this situation. Perhaps even impossible. Windows Enterprise isn't available as retail boxed copies; it has to be bought through Microsoft's various volume licensing schemes. Prior to March 2014, the only way to license Windows Enterprise for a PC was to get it bundled with Software Assurance (either as a bundle of license plus SA, or, for new PCs shipped with Windows Pro, as an SA-only SKU). As such, no customers should have been in the position of having Windows Enterprise but no SA upgrade rights.

However, in March a new Windows Enterprise License-only SKU was introduced. This entitles corporations to install the current version of Windows Enterprise, or any supported older version of Windows Enterprise, but it doesn't include Software Assurance's two or three year entitlement to use any new versions that are released. Users of such licenses should be rare—the pricing is structured such that the equivalent license-with-SA version costs about the same—but they probably exist somewhere. Our understanding is that this License-only SKU was created to handle organizations that for one reason or another can't enter into annuity agreements.

We're not sure what the answer is for these people. We've asked Microsoft, and have been told that clarification will be forthcoming.

Our understanding is that once an Enterprise SKU has been upgraded to Windows 10, it will be able to participate in the same on-going stream of upgrades.

Overall, the new approach to upgrading will streamline things for home users and small businesses. Software Assurance customers won't even notice a change, except keeping pace of the current operating system should become simpler. But at the edges, it looks like some users will fall between the gaps, and the solution for them remains unclear.

Editor's Note: The Ars Technica Review of Windows 10 will be available later today, July 28.