The hidden costs of a dual-core revolution

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If an agency decides dual-core processors are in its future, what does that mean for its software licenses?

In traditional server environments where systems often include multiple processors, IT departments usually buy a software license for each processor an application runs on. With that in mind, imagine every server, desktop and mobile system running what are, at their hearts, multiprocessor processors.

The transition to dual- and multicore processors will force software companies to rethink how they sell licenses'and that should have software buyers concerned. With a few notable exceptions, industry has been largely silent on the subject of dual-core licensing.
Last October, Microsoft announced it would sell server licenses for each processor, as usual, and not for each processor core.

'Our customers want to understand software costs as they evaluate the return on investment of new technologies, such as multicore processors,' said Brent Callinicos, corporate vice president of worldwide licensing and pricing at Microsoft.

BEA Systems Inc. of San Jose, Calif., which sells infrastructure software including the popular WebLogic Enterprise Platform, announced it would charge 25 percent more for software running on dual-core chips.

But experts worry some companies may double their licensing fees by treating each core as a separate processor.

Make deals now

With dual-core processors expected to become mainstream commodities by 2006, Stamford, Conn., research company Gartner Inc. recommends IT groups consider renegotiating software licenses soon so they don't have to worry about costs increasing by as much as 50 percent.

'If an upgrade to the new dual-core design offers only a 50 percent improvement, a doubling in the license fee becomes a tax on technology innovation with little return,' said Alexa Bona, research director at Gartner.

When releasing Gartner's recommendations last year, Bona said dual-core processors aren't the only technology that could make software licensing a dicey business in 2005. Hardware virtualization and utility computing also make it difficult to determine how software will be sold in the future.

Consider this

Gartner recommends that agencies:
  • Negotiate a maximum 25 percent increase, citing announcements by Microsoft and BEA as leverage

  • Negotiate contracts that recognize server partitioning

  • Ask for pricing based on socket or module when two separate CPUs share a single socket

  • Investigate alternative license metrics offered by vendors.

'Enterprises need to address this convergence [of factors] rapidly,' Bona said. 'By year-end 2006, the manufacture of single-core chips will end. If contract or pricing policies on this issue alone are not addressed, enterprises will have no option but to pay significantly more.'

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