Microsoft has confirmed that it will not require users to buy extra licences if they use new dual-core processors, expected to appear early next year.

The decision to move away from its per-CPU licence model will come as a relief to Intel and AMD - who will push the new chips heavily - and end users who faced a hefty bill for using the technology. It was, however, the only commonsense decision for the software giant to make.

Previously, Microsoft has refused to comment on how it will license software for chips with more than one core, but under a revised software licensing policy, Microsoft will now consider dual or multi-core processors as a single chip, said Cori Hartje, director of marketing and readiness with Microsoft's worldwide licensing and pricing group. "What we're trying to do here is make sure that customers can upgrade to this new technology without having to pay a premium for software costs," she said.

The announcement means that customers who purchase a number of Microsoft products that are licensed on a per-processor basis, including Microsoft SQL Server and Microsoft BizTalk Server, will not see a sudden jump in licensing fees as they move to dual-core processors.

Licensing policy for products like Windows Server 2003 or Exchange Server, which require more expensive "Enterprise" licensing when they run on systems with more than four processors, will remain unchanged, Hartje said. "You could certainly use four dual-core processors and still be using a Standard Edition," she said.

In recent years, microprocessor vendors have begun designing chips with more than one processing unit, or "core", on the chip in an effort to boost performance for certain types of applications. As far as the software running on the systems is concerned, dual-core chips appear to be two separate processors, raising the question of whether or not they should require two software licences.

To date, there have been different answers to this question. Oracle's licensing policy for example treats dual-core chips as if they are two separate processors, while Red Hat has taken the opposite tack.

Microsoft's policy will come as a relief to the hardware vendors, worried that unfavorable licensing terms could hamper the adoption of their dual-core designs, said Kevin Krewell, editor in chief of Microprocessor Report.

The policy will also put pressure on Oracle and other software vendors to adopt a similar approach. "It will make Microsoft's solutions in these multi-core processors more cost-effective than competing Oracle solutions," Krewell said. "It's certainly going to be the solution to this issue that all the hardware vendors are going to point to. They're going to point to Microsoft and say, 'Microsoft has decided that per-processor is the right way to go, why can't others decide the same thing?'"