IBM hikes licensing price on faster Power6 processors

IBM has increased the cost of its new Power6 processor, further complicating its licensing scheme.

IBM Corp. launched what it calls the fastest microprocessor ever built in May -- the dual-core Power6 -- and that speed comes at a premium.

At 4.7 GHz, the dual-core Power6 doubles the speed of the processor's previous generation (Power5) while using nearly the same amount of electricity to run and cool it. This means customers increase their performance by 100% or cut their power consumption by about half, according to IBM.

The company designated a higher value for licensing on the Power6, further complicating an already confusing pricing structure.

IBM further complicates licensing

More on processor and software licensing:
Licensing on quad-core gets tricky  

IBM restructures software licensing  

IT managers on software licensing: keep it simple

Compared with most other vendors, IBM's software licensing on multicore chips is complicated, and pricing for Power6 is no exception. The licensing plan for the Power6 processors, which are available on IBM's System p and System i server lines, is more expensive than the previous generation, but Big Blue says that greater cost is offset by increased performance.

In 2006, IBM replaced its processor-based pricing with something known as "value unit" (VU) pricing. Prior to the change, customers added up the number of processing cores on which they planned to deploy their database management software (i.e., DB2) and multiplied by the price. Now, with VU pricing, cost is based on performance per core.

IBM changed its licensing plan from per processor to VU because "not all processors are created equal," said Christopher Rubsamen, spokesperson for IBM. "If you look at a gas company, they don't charge the same amount for each grade of gasoline. Premium is more expensive than the lowest grade."

Licensing by performance

As of May 22, 2007, each IBM Power6 processor requires 120 VUs or 1.2 existing per-processor licenses for the software available on that platform. This compares with 100 VUs for the Power5 dual-core processor, which is the same as IBM's licensing costs for Intel's Itanium, Sun Microsystem's UltraSPARC IV and Hewlett-Packard's PA-RISC.

IBM says that the price hike is justified because the Power6 processor performance is significantly greater than that of Power5. In other words, fewer Power6 processor cores will typically be required to run the same workload that predecessor technology can run, according to IBM.

So customers that migrate their IBM middleware from Power5 to Power6 would need additional VU licenses. For example, if a customer migrates from an 8-way Power5 server to an 8-way Power6, he would need to increase from 800 VUs to 960 VUs, which amounts to an additional 160 VU licenses.

Chris Wolf, a Burton Group analyst who has been vocal about simplifying licensing, was surprised by IBM's decision to increase the number of licenses required on the Power6.

"It's understandable that IBM would want to restructure its software licensing model to adapt to today's multicore CPU architectures, but by going as far as to license by CPU model and number of cores, IBM is adding to the already complex task of managing software licenses across the enterprise," Wolf said.

Licensing squabbles

Other vendors that license per processor include Novell Inc., Red Hat and Sun Microsystems.

But there are exceptions, such as IBM and Oracle. Oracle has one of the more complicated licensing setups; it recognizes each core as a separate processor when multicore chips come into play. The company has four categories for licensing, and each category has a unique processor factor that is used to determine the total number of processor licenses.

Let us know what you think about the story; e-mail Bridget Botelho, News Writer.

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