Oracles Solution Skirts the Problem with Database Licensing

Opinion: As much as we would like to blame Oracle, it's usually our own decisions that cost our organization the really big dollars.

I love Oracles licensing policies. I truly do, because it provides me with income as a independent analyst.

Companies hire me to help them come up with strategies to take best advantage of Oracles seemingly convoluted licensing rules.

Now, Im not bragging here, but more often than not, I find millions in possible savings; the problem is that the customers learn the one truth they often dont want to hear.

Whatever situation they find themselves in with Oracle is typically their own fault.

Yes, folks, as much as we would all like to blame Oracle or any vendor really, its usually our own decisions, our own poor asset management process that costs our organization the really big dollars.

The big news last week was that Oracle supposedly caved in to market pressure concerning multicore processors.

/zimages/5/28571.gifRead more here about Oracles decision to update its licensing policy.

The disconnect is that Oracle still believes in the concept that the power of the processor somehow impacts the value an organization receives from its database software.

Many users still remember when Oracle introduced the concept of power units.

With power units, Oracle calculated the number of processors multiplied by the speed of the processor (MHz) to come up with a pricing unit they called a power unit.

Furthermore, they calculated that a RISC processor should have a 50 percent upcharge over an Intel based processor.

Oracle was not exactly out on a limb here, because capacity-based pricing had been accepted practice for years.

The problem with power units, of course, is that each generation processor is faster, meaning customers had to keep buying additional power units from Oracle as they migrated to newer hardware, even if the actual number of processors stayed the same.

Needless to say, customers were not happy then, and Oracle had to abandon that model within a short time.

The 75 percent solution (each core equals 75 percent of a processor) is similar.

Consider the case today where you have licensed Oracle on a four-processor, dual-core server.

Under the old model, you would have to pay $40K multiplied by eight (eight cores) for a total of $320k.

Under the new model, you would pay $240K, a 25 percent discount.

Now lets say you migrate to a two-processor (five-core) server in two years.

Even though you have reduced the number of processors, you would have to pay Oracle $80k for the two additional cores, thereby eliminating any discount you received initially. Addition by subtraction, some might say.

Next Page: Problematic models.