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Original URL: http://www.theregister.co.uk/2006/08/22/amd_oracle_ibm_licensing/

IBM and Oracle must change software pricing – AMD

By Gavin Clarke in San Francisco
Published Tuesday 22nd August 2006 19:49 GMT

AMD expects companies like Oracle and IBM - devising Byzantine pricing metrics for their software in virtualized environments - will be forced to compromise on licensing by their customers or risk losing business to open source.

The chip manufacturer believes concessions are vital for vendors in order to make their licensing easier to understand and more palatable for enterprises, and also to help virtualization take off in the small and medium business (SMB) market.

So, what's the main concession that will be made? AMD believes Oracle and IBM will be forced to offer site licenses.

AMD's director of commercial solutions Margaret Lewis told The Register Oracle's multiplier pricing for multicore is "esoteric." "Anything that's hard to multiply introduces a complex equation that isn't going to be as friendly to the user," she said.

Oracle last year split from a growing industry consensus on multicore around charging per chip, rather than per core, and on virtualization, that will see vendors like Microsoft allow multiple instances of their software to run on a chip in a virtualized scenario. Oracle's system uses a variety of multipliers, depending (http://www.theregister.com/2005/12/20/oracle_pricing_processor/) on the processor being used.

IBM is also eschewing the industry consensus, having recently announced plans by the end of 2006 to charge using a set of in-house devised metrics - called Power Value Units - that charge the user based on the processors' "power".

AMD is in "deep," on-going dialogue with licensing groups at Oracle among others to devise sensible licensing metrics for multicore and virtualization.

Lewis claimed, though, AMD's influence is limited because it can't tell partners how to sell their products. "With a lot of conversations we try to drive it without being heavy handed," Lewis said. "The end user has the power to drive this.

"What's going to happen for a lot of enterprise customers is they are going to negotiate software licenses by site. To make licensing more acceptable, vendors will make concessions by site. As software licensing moves out into the midmarket and SMBs this will have to be addressed. One solution is to have multiple instances with one license on one machine - the Microsoft approach."

Lewis believes open source - particularly Xen and the Linux, Apache, MySQL and Perl/PHP/Python LAMP stack - will provide leverage on closed source vendors. Without that leverage, closed-source vendors' pricing will delay uptake of virtualization at large, as only certain types of applications move to virtualization.

"Open source gets away from some of these grassroots licensing issues. The fact that Xen is being looked at with such interest and [there are] solutions like LAMP, means there's a group of people who have sidestepped the licensing issue," Lewis said. "Some people will look at using an open source database instead of Oracle or DB2."®

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