Day of Reckoning

By Jason Brooks  |  Posted 2003-06-16

Software pricing and licensing have always been something of a black art. The question of whether to scale costs by user, CPU or some other concocted measure, such as Oracles ill-fated Universal Power Unit, is a query that belongs in the category of "How many angels can dance on the head of a pin?"

Now, the looming technology of multiprocessing CPUs that companies such as Sun Microsystems are preparing threatens to throw an already-random practice into further disarray and provide enterprises with another reason to consider open-source software.

While system memory has been growing consistently faster, its lagged well behind the clip at which processor speeds have accelerated. The resulting memory latency can leave chips underutilized, twiddling their virtual thumbs while waiting for memory to pass along the next chore. This effect is particularly pronounced for server applications that demand high throughput but only moderate processing power.

Sun has been talking about addressing the latency issue with multicore, multithreading designs that break tasks into pieces matched to the capacity of the memory system to pass work units along. One result would be single-processor systems that do the work of multichip systems at lower overall costs.

Heres where we hit the software licensing snag. Enterprise software vendors typically charge companies on a per-CPU basis. How, then, do you make out an invoice for a one-chip system that does the work of—or appears internally as—a four-way system?

Software acquisition as we know it today is intrinsically confusing because its largely arbitrary. You pay one price for a four-way server and another for an eight-way, and these prices are directly tied to the physical product youre getting.

Now, if you buy a copy of Oracles database for a four-way server and later opt to run it on an eight-way, has Oracle actually delivered something more to match the doubled fees youll pay? Is a company with 200 client access licenses for a given piece of software on a given server really "consuming" more of that software than a company with 20 licenses on the same machine?

Since open-source software companies sell products that are freely available elsewhere, theyre forced to focus on specific deliverables such as service, timely updates and fixes, and customer- tailored extensions.

Per-CPU software licensing isnt foreign to the open-source world, however. Red Hat and SuSE have each begun selling their enterprise Linux distributions in this way. The difference, though, is that if enough Red Hat customers are dissatisfied with the way Red Hat is handling them, a separate company could seize the opportunity by selling the entire Red Hat stack under more attractive conditions. Try that with Windows.

The limitations of current models result in tremendous waste for everyone involved. Individual companies buy more licenses than they need, sucking up funds that could be spent elsewhere, or they buy too few, leaving themselves open to costly and time-consuming audits. Some companies, unable to find a slot in this weeks price chart into which they can squeeze themselves, will end up buying no licenses at all, a loss for hardware and software vendors alike.

Sun isnt the only vendor with products on the horizon thatll leave customers feeling chafed by per-CPU, per-user or whatever other arbitrary license scheme enterprise software vendors dream up. Up-and-coming technologies such as grid computing and server virtualization will also cause customers to question whether theyre getting their moneys worth out of their software licenses.

The trouble is, were stuck with a software acquisition scheme thats stalled midway between "pay as you go" utility computing and "do what you want with it" software ownership. It seems certain that enterprise software vendors will figure out a way to boost their capacity to monitor and control customer use enough to build out a viable utility computing structure before too long. Companies that would rather pay a set price for software and then do with it what they will probably wont get this option from the likes of Oracle and Microsoft—at least right away—but this is a gap that open-source vendors will be only too happy to fill.

Senior Analyst Jason Brooks can be reached at

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