Deciding who should pay for speed

Recently Microsoft announced that when it comes to upcoming dual-core processors, it has no plans to charge for two licences per processor for any of its Windows Server products. The company may be bucking a trend. But by doing so, it may serve to reverse that trend.

The multicore approach to chips is the industry’s logical next step to dual-core processing, taking the power and speed of the latter and packing it into a single unit. Although in use by IBM and Sun, dual core is about to enter the mainstream as Intel and AMD release multicore offerings next year.

This has already touched off a debate in the software industry about how this might change software licences.

It’s safe to say that not all vendors see eye-to-eye with Microsoft on this issue. Most vendors prefer to charge for their products on a per-processor basis and, to them, it follows that dual-core chips also mean two licence fees packed into a single unit. But licensing has never been the industry’s strong suit. Agreements are often full of legalese and loopholes that few have time to read. Licensing models other than per-processor have been touted but, with a few exceptions, not widely adopted.

In a recent interview with our sister publication Computerworld U.S., Jacqueline Woods, vice-president of global licensing and pricing strategy at Oracle, said her employer’s position on licensing for dual core is as follows: “We don’t have a position with respect to dual-core processors. A core is equal to a CPU, and all cores are required to be licensed. Therefore, you are required to have two processor licenses.”

Of course, any company with such a policy — not to single out Oracle, as IBM takes a similar position — is within its rights to continue. One user quoted in our front page story even says he’d be willing to pay more for the added power in his software due to the boost dual core will give it, although he said that paying double may be excessive.

I agree. Few will walk away happy having to effectively pay more for software under the dual-core model — customers may not be left with the impression they’re being dealt with fairly. Such talk can’t be music to the ears of Intel, either. Of course, Microsoft lives in an Intel world and it no doubt calculated that its revenue stream would not unduly suffer in a multicore world .

And though this may not be the most crucial issue facing you or the industry, it does once again highlight the curious approach the IT industry so often takes toward its customers — as the passengers, not the drivers. How software vendors can approach pricing so radically different, and yet all claim to speak for you.