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Oracle processor core pricing a comedy of fractions

11 cores = 8.25 processors = 9 chips. Got it?

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Get your calculators out. Oracle has responded to the arrival of high volume multicore chips by introducing a new pricing model, and it's a comedy of fractions.

Oracle's lucrative franchise has been based on per-CPU pricing, and the company has so far pretended to ignore the massive changes taking place in the processor industry. Unix vendors have sold dual-core processors for some time, and now AMD has joined the party, with Intel to follow. Two cores don't spell twice the performance, but they do deliver enough of a performance boost to muck up per processor licensing models.

Now Oracle has acknowledged that multicore processors do exist.

"For the purposes of counting the number of processors that require licensing, the number of cores in a multi-core chip now shall be multiplied by a factor of .75," Oracle said. "Previously, each core was counted as a full processor."

Still paying attention?

"For example, a 4-way, dual core processor server which previously had a list license fee of $320,000 (4*2 [cores] *$40,000) would now have a list license fee of $240,000 (0.75 * 8 [cores] *$40,000)."

And it gets even more complicated! A sharp Register reader forwards this advisory from Oracle's finer print:

"A multicore chip with 11 cores would require a 9 processor license (11 multiplied by a factor of .75 equals 8.25 which is then rounded up to the next whole number which is 9)."

Nice.

(Oracle also fails to address Intel's hyperthreading technology and SMT from others vendors - but we're waiting to hear back on those matters.)

Oracle will price a one-way server running on a dual-core chip as a one-way server for its Standard Edition One and Standard Edition products, which by itself, makes Oracle's per user and per employee pricing models look pretty attractive.

All of this is difficult enough, before you get to the rounding. Naturally, low fractions are rounded up.

Stacking up the pricing models

The chip makers have lobbied for per-socket pricing schemes to replace the per-processor model. Such proposals make sense when you consider that dual-core chips will quickly evolve into multicore chips and that each processor vendor will have a unique mix of cores and core speeds. Software makers, however, have recoiled at such an idea, knowing that customers will receive tremendous horsepower and need fewer processors. Er, and that the ISVs need just as much money as before.

How does Oracle's plan stack up?

Well, so far, operating system makers have sided with the chip makers to pick up the per-socket model. In the middleware tier, BEA charges a 25 per cent premium on dual-core systems while a company such as VMware uses the per-socket model as well. IBM stands as the most confusing member of the bunch, pricing software for x86 servers on a per-socket basis, while selling DB2 and middleware for its own AIX OS and Power chips on a per-processor core basis.

IBM and Oracle have the most to lose from a massive pricing shift on their highest-end products, making them the least radical of all the major software vendors.

It's nice see Oracle at least acknowledge the world changing around it. The company was first pressed on the issue way back in 2002, so it's had some time to mull over the multicore idea.

The big losers in all this are, of course, the customers who must now start keeping track of .75 multipliers over here and .25 multipliers over there, while balancing per employee pricing with their left hand and per user licensing with their right hand. Many large companies have already locked themselves into long-term, customized software pricing from a host of different vendors, while smaller companies cannot afford a math whiz from the local college to figure out which pricing model costs less. Meanwhile, hardware makers continue to cram more power in a smaller space, while reducing the price of their hardware.

Pretty picture? Not exactly. ®

Related stories

Microsoft must woo partners
IBM cuts software price on Opteron and OpenPower kit
AMD tells software companies to re-think dual core
McNealy slaps Oracle over pricing
Dell turns on too pricey Red Hat
Enterprise software faces 50 per cent price hike

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