Microsoft Backs Intel, AMD on Dual-Core Licensing

by Alex Woodie

Microsoft yesterday announced a new pricing policy for multi-core chips that backs chipmakers Intel and Advanced Micro Devices and will mean lower prices for software buyers. Microsoft says that when Intel and AMD start shipping dual-core chips for servers next year, it will not make any changes in its licensing policy, and will charge the same amount for server software running on single-core processors as it will for software running on dual-core processors.

Since IBM introduced the first dual-core POWER4 processor, in 2001, the software industry has been grappling with the issue of how to set prices for multicore chips. While multicore chips share the same piece of silicon and are technically a single processor, they effectively offer the same performance increase you would find if you had a collection of single-core processors.

Hewlett-Packard and Sun Microsystems have followed IBM's lead with lines of dual-core, 64-bit RISC chips for the Unix server market, and, in 2005, AMD and Intel are set to launch their own lines of dual-core x86-based chips for the Windows and Linux server markets.

Since dual-core chips effectively double the processing power (as future four-, eight-, or 16-core chips will offer four, eight, or 16 times the processing power), compared with their single-core processor counterparts, some software vendors have decided that their customers should pay for running their products on more powerful machines. Oracle and IBM, for example, charge for dual-core products as if they were two separate chips.

On the other hand, some of the scrappier vendors in this ailing, stop-and-go IT market, such as Sun and Novell, have decided to give customers a break on this issue, and to charge for software run on dual-core chips as if it were a single processor. This is the approach that Intel and AMD have advocated, as it provides an incentive for customers to buy servers with multicore chips. And this is why Microsoft's decision to charge for software on the upcoming dual-core chips from AMD and Intel as if it were a single processor is so significant.

Specifically, Microsoft says that it will continue its practice of charging on a per-processor basis, whether it uses a single-core or dual-core design, for products in its Windows Server System family, which includes the Windows Server 2003 operating system, SQL Server database, BizTalk Server integration software, and others. (The cost of some of Microsoft's other server products, such as Exchange, are based primarily on the number of users, so they won't be affected as much by the new policy.)

Microsoft's decision applies to server products. When dual-core chips start appearing in PCs, the company says, it will apply the same policy.

The decision to keep its customers' costs down was applauded Microsoft's partners in the high-volume "standards-based computing" market. "In deciding to license software by processor and not by core, Microsoft is making an important move to make the benefits of multicore platforms readily available to all customers," Deborah S. Conrad, vice president and director of Intel's solutions market development group, said in Microsoft's announcement.

Researchers for IT analyst Gartner also praised Microsoft's decision. "What we're seeing today is a willingness to continue licensing server products on a physical processor basis and not exploit dual and multicore technology to garner additional licensing revenue," Alvin Park, a Gartner researcher, said in the Microsoft announcement. "Software vendors throughout the industry would do well to take notice of this position."