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New server chips carry hidden cost

By , Network World
July 19, 2004 12:15 AM ET

Network World - In the rush to roll out servers that put multiple processors on a chip, IBM, Intel, Sun and others inadvertently are raising software costs for users.

At issue is that software vendors such as Oracle and Microsoft that license software on a per-CPU basis are likely to consider each processor a separate CPU, a practice that means double the licensing costs for enterprise users deploying new dual-core servers. These servers have two processors on a single piece of silicon. With four-core servers and more on the horizon, the issue likely will become amplified as vendors try to figure out how to price software and enterprise users work to manage IT budgets.

At the same time, other technologies - such as server virtualization and grid computing - that fall under the utility computing umbrella, in which computer resources are pooled and workloads shifted according to application demands, also are causing some tricky software licensing issues.

The trend toward multi-core systems is an effort by server chip makers to drive up performance, while reining in system power requirements and heat generation. By using these architectures, vendors can use more lower-power cores - which generate less heat - instead of ramping up the frequency on single cores to boost performance. IBM has had a dual-core chip since 2001, and Sun and HP rolled out dual-core processors earlier this year. Intel and Advanced Micro Devices recently announced that they would move to dual-core designs in 2005.

"Multi-core is a symptom of a bigger issue," says Al Gillen, research director of system software at IDC. "The bigger issue is that we have changing technologies that are making historical licensing models no longer directly compatible with the way people are buying and deploying their equipment today."

W.L. Gore & Associates, best known for its Gore-tex fabric, negotiated a software license with Oracle late last year and then began updating its Sun hardware. In the process of bringing in servers based on Sun's first dual-core chip, UltraSparc IV, the Newark, Del., company discovered that Oracle considered each dual-core UltraSparc IV to be two processors for licensing purposes. That meant W.L. Gore was faced with paying double what it originally expected to pay for licensing, amounting to $100,000 per server in additional costs.

"When we first heard this, we weren't happy, of course," says Richard Sun, network systems engineer at W.L. Gore. "In all of our initial conversations with Oracle, before we purchased the licensing, we had said we were going to buy the [Sun] hardware when we were ready to implement, so we felt going to UltraSparc IV was no issue."

Analysts say W.L. Gore is not alone when it comes to being surprised by the increased software costs when updating to multiprocessor systems.

"In fact, I have spoken with clients who have been told exactly the opposite from the server vendors," says Jane Disbrow, a research director with Gartner. "They've been told, 'No, you don't have to pay double licenses. This is going to save you money in software.' I'm the one that has to give them the bad news."

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