Microsoft Won’t Charge More for Multicore Licenses

As servers with dual-core processors come closer to hitting the market,Microsoft announced today it will not base its per-processor softwarelicensing charges on the number of cores in a chip, sticking to thetraditional price per processor, regardless of its number of cores.

The issue has risen in significance as software vendors with per-processorlicensing — having struggled somewhat to address other processortechnologies such as hyperthreading — adjust to technologies that cut downon the number of machines needed.

Analysts have warned that software makers mightlicense their server products at double the price for double the number ofcores, but many have also indicated that software companies havelittle to gain from multicore price increases.

More Power, Same License

Although some vendors have hinted they may charge more for softwarelicensing on multicore processors, most have moved closer to Microsoft’sannounced stance, which seeks to maintain the status quo without chargingmore for multicores.

“Microsoft software that is currently licensed on a per-processor modelwill continue to be licensed per processor, not per core, for hardware thatcontains dual-core and multicore processors,” the company said in astatement.

Microsoft said its multicore licensing decision is aimed at driving highervolume and better value with the advent of dual-core and multicore serverprocessors from both AMD and Intel, which are expected in hardware beginningnext year.

Microsoft said regardless of whether they are running on a four-processorserver with single cores or on a server with four dual-core chips, productssuch as SQL Server and BizTalk Server would require four licenses based onper-processor pricing.

“Our customers want to understand software costs as they evaluate thereturn on investment of new technologies, such as multicore processors,”said Microsoft vice president of licensing and pricing Brent Callinicos in astatement.

Problems With Progress

Despite the significant boost in performance that comes from doubling thecores on a processor — allowing more simultaneous functions from the samenumber of machines — dual-core and multicore processors also createsoftware licensing issues.

According to Gartner analyst Martin Reynolds, the fear has been thatsoftware vendors would double their prices for dual-core processorcoverage, creating big cost jumps for enterprise customers. Gartnerrecommends customers attempt to negotiate software licenses that count asingle-chip device as one processor, regardless of how many cores itcarries.

While some vendors, including IBM and Oracle, have signaled they mightcharge more in licensing for dual-core and multicore products, Microsoftconfirmed what many analysts had predicted — that the addition of processorcores was by no means an opportunity for software vendors.

Hardware Ahead

Yankee Group senior analyst Laura DiDio told TechNewsWorld that Microsoft wasmaking a proactive move to address the issue, but was also signaling to itscustomers that it is not a hardware vendor and could not lower softwareprices along with the dip in hardware costs that comes with the efficiencyof multicore chips.

DiDio said that while customers might benefit from more efficient processors andinteraction with the software, they will pay the same rate they’ve been payingto license Microsoft products with the new hardware.

“This multicore technology really illustrates the dichotomy between therapid advancement of hardware capability, which is in turn making issueswith how software companies license the technology,” DiDio said.

Wait and See

Referring to the complexity of per-processor licensing, even without theaddition of dual-core technology, DiDio said software makers do not want tobe seen as raising their prices, for fear of losing customers.

Nevertheless, software vendors have proceeded cautiously on the corequestion, with rivals IBM, Oracle, Sun, Microsoft and others waiting to seehow the others approach the issue, partly to learn what works and partly tohave the opportunity to counter, according to DiDio.

She said IBM is in a different situation since it makes money not only fromsoftware and services but also from hardware.

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