IBM has changed its pricing policy over dual-core processors, coinciding this week with the the official launch of dual-core processors by Intel and AMD.
IBM broke with its long-standing pricing policy and said it would charge the same price for software licences for single-core and dual-core AMD systems. However, AMD, on the other hand, has used the launch of its dual-core chips to significantly hike the price of its high-end Opteron processors.
AMD's dual-core Opterons contain two separate processing engines, or cores, on a single chip. The first three of these chips, targeted at servers with four processors, will begin shipping over the next few weeks in products such as HP's ProLiant BL45p and DL585 systems and Sun's Sun Fire V40z servers.
At present, IBM has committed to shipping the dual-core Opteron in only one server product, the IBM eServer 326, which is designed for technical and high-performance computing users. IBM has not said when it expects to ship a dual-core version of the eServer 326.
Still, Big Blue's announcement is good news for WebSphere and DB2 customers who may be looking at the dual-core Opterons. IBM has been offering dual-core versions of its Power processor for several years now, but it has licensed the software on a per-core basis.
With Opteron, and Intel's upcoming dual-core server processors, customers will buy licences for each processor, not each core, said Ari Fishkind, an IBM spokesman. "For the newer first-generation Opteron and Xeon chips that are now emerging, the advances in power are incremental," he said. "We think they're terrific chips and offer a lot of potential, but for now most customers will not be fully exploiting the chips' performance."
AMD sees things differently. "If you look at some of the benchmarks, you'll see the utility that we're delivering with the processor. What we're trying to do is price for the utility that we deliver," said Margaret Lewis, a senior software strategist.
The top-of-the-line dual-core Opteron lists for $2,649, more than $1,000 above the price of AMD's highest performing single-core Opteron.
Enterprise software vendors have developed dual-core licensing policies in the Unix market, which has already seen dual-core systems from a number of vendors. But with the Opteron servers now hitting the market, software companies will need to take a hard look at whether they have to change pricing models for the lower-cost Linux and Windows market, said Amy Konary, director of software pricing and licensing with IDC.
"The argument becomes: 'How much more value are you going to get out of your software for having this additional core?'," she said. "There's been a lot of customer concern that having the dual-core is not going to double the value of the software."
Another question ahead is how software vendors will license dual-core systems based on Intel's Itanium 2 processor. IBM's Fishkind could not say whether IBM intended to apply the per-core licensing model to Itanium.
In fact, IBM reserves the right to change its dual-core licensing strategy for AMD or Intel systems, Fishkind said. "By all rights it should be considered as two processors," he said of the dual-core Opteron.
Microsoft has already stated it will not license its software on a per-core basis and confirmed this policy would apply to "x64" Opteron and Xeon systems as well as Itanium. "Microsoft's multi-core licensing policy is the same, per processor regardless if it's x64 or dual-core Itanium," a spokesman said.
Oracle has long said it intends to retain its policy of licensing dual-core systems on a per-core basis. It may be the ultimate target of IBM's pricing strategy, said Kevin Krewell, editor-in-chief of Microprocessor Report. "This is all going to put pressure on Oracle, especially in the x64 server space, where there's a lot of competition," he said. "Oracle's got to decide for themselves what kind of pain they're willing to take."
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