When software maker Oracle decided to revisit its licensing policy for the latest multi-core dual processor chips in June, many analysts were not surprised. The latest processors, from Intel, AMD and others, are powerful and consume less heat, but Oracle's policy of charging per processing core, rather than for the overall processor, penalised the customer. In the light of Microsoft's decision that multi-core chips would be treated as single processors, the policy looked to be unsustainable.

Oracle has subsequently softened its stance, and will now apply a premium on licences for servers running multi-core chips. This, says Jacqueline Woods, vice president of global licensing at Oracle, reflects the reality that those using processors with more than one core are gaining a significant performance enhancement. "The incremental value in performance that you get using dual core is between 1.5 and 1.75 times better," she explains.

For the majority of users running servers with multi-core processors (there are some exceptions) Oracle will in future charge a 75% premium for each additional core.

Customers running Oracle's database software on a server with two dual-core chips will be charged as if they are running the software on three different servers. Oracle has been stung by criticism of its licensing policies, but, as Woods points out, there is little agreement among vendors of how to charge for processors with multiple cores. "If you look at Microsoft, Oracle, IBM, we're all doing things slightly differently. We think we have the pricing right for this [multi-core] environment."

However, Woods also recognises that the issue of how businesses pay for software is likely to become increasingly complex. Technologies such as virtualisation and grid computing make the calculations of how much processing power is used by any given application almost impossible, "Over time, I think we'll see a trend to user-based licensing," says Woods. ° For a detailed discussion on software licensing models, see Information Age, September.