July 14, 2005 12:54 PM PDT

Oracle shifts multicore licensing model

Following months of anticipation and some high-profile criticism, Oracle has changed the licensing model for its databases and middleware on multicore servers, bringing it a step closer in line with competitors.

The company now treats each core on a multicore processor as three-quarters of a chip when calculating license costs for its database and application server products, according to the latest licensing terms posted on its Oracle Store Web site.

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What's new:
Oracle has changed its database and middleware pricing for multicore processors, treating each core as three-quarters of processor.

Bottom line:
The licensing change, which had been anticipated for months, will please customers, according to analysts and partners. But Oracle is still charging a premium compared with the policies from database rivals IBM and Microsoft.

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Until recently, Oracle's policy was to treat each core as a separate processor, a stance that was at odds with most other large software providers' policies.

Major infrastructure software companies, including Microsoft, Red Hat and Novell, have a policy that treats a multicore chip as a single processor for calculating license fees.

In April, IBM shifted its policy and now treats dual-core chips from Advanced Micro Devices and Intel as a single processor. But it continues to treat each core as a processor for IBM's own Power chips.

After IBM, Oracle remained the last holdout among large software companies to stick to a policy of treating each core as a processor, said Julie Giera, an analyst at Forrester Research.

"Oracle had to (change) competitively," Giera said. "They've been taking advantage of customers, frankly, by charging full price for these cores even though in dual and multicore chips you're not getting full capacity."

Giera said the change will likely soothe some irritation and dissatisfaction among Oracle customers.

Multicore processors pack more than one processing unit, or core, on a piece of silicon. The technique boosts performance of a machine, while keeping the heat generation down, although two cores do not double the performance.

Dual-core systems are expected to become more common since Intel and AMD released their first dual-core chips earlier this year. Server chips with several cores are already on the market from the likes of IBM and Sun Microsystems.

"Everyone's got a slightly different twist on how you have to pay for virtualization and multicore."
--Julie Giera, analyst, Forrester Research

Server software products historically have used a per-processor license fee, a method that's being challenged by the emergence of new technologies.

Traditional per-processor pricing means a customer could pay substantially more when buying a database or application server to run on a server with multicore chips if each core is considered one processor.

Michael McDermott, chief operating officer of Cisco Inc., which resells Oracle software, called the change a "step in the right direction."

He said that the issue of dual-core pricing has come up with a client looking at a large installation of clustered Oracle databases. Oracle's discount would create a substantial savings from a licensing standpoint, McDermott said.

"When we heard about IBM's policy, we were thinking that Oracle would change too," he said. "Maybe they'll get more pressure to do like everyone else."

Different twists
Oracle has faced some public criticism for its former policy.

At the Oracle OpenWorld customer conference last December, Sun CEO Scott McNealy took a few jabs at Oracle, predicting that the company would change its policy. McNealy referred to Sun's planned dual-core Opteron servers as a "big revenue opportunity for Oracle with their dual-core pricing."

Like Sun, chip manufacturers Intel and AMD have been vocal proponents of a "per socket" pricing, which would treat several cores as one processor.

Meanwhile, BEA Systems, like Oracle, has decided to charge a premium for its software that runs on dual-core servers. In

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Oracle still doesn't get it
Changing their model to charge 3/4 per core doesn't bring them in line and is only a small step from where they've been.

What they've failed to realize is that the nature of processor performance improvements has been changed from a rapidly increasing clock speed model which provides significant performance increases for single threaded processes (like MS DOS) to a multiple cpu core model with modest clock speed improvements which finally results in better performance for multi-threaded OSes and processes (like Linux, Unix, Windows, MacOS...).

Oracle wants to treat these multi-core cpus like separate processors were treated in the old model but in reality new systems will still have as many multi-core chips as they previous had single core chips. They're afraid they're going to loose revenue and their fear of lost revenue is going to be self achieving.
Posted by 202578300049013666264380294439 (137 comments )
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