Dual-core debate

Moore's Law - which states that processing power will double every couple of years - will not disappoint users in 2005. Advanced Micro Devices and Intel plan to deliver newly designed processors that boost performance by putting two cores on a single chip. These new designs will increase performance anywhere from 30% to 90%, according to analysts, without increasing clock speed and thus raising power consumption.

However, what might disappoint users is how some software vendors raise prices based on the design of these new chips. In these vendors' eyes, the new dual-core chips look like two separate processors on one piece of silicon, meriting two licenses instead of one.

On one hand, you've got vendors like Oracle, which says it will require one license for each core on the processor, effectively doubling the price of its software. On the other hand, you've got vendors like BEA Systems, which intends to impose a 25% uplift on its software running on dual-core chips.

Users say the increased licensing costs are ridiculous. "It's like a double tax," says Brian Perlstein, lead systems architect in the design and infrastructure group at Oakwood Healthcare System in Dearborn, Mich. "I'm not getting better value out of Oracle - I'm getting better value out of the CPU that I purchased. It's essentially charging twice for the same product just because it's running better."

Historically, software vendors have benefited from hardware improvements, adds Harry Vanicelli, director of technology at Oakwood. "You can't have Moore's Law go by the boards just because people want to charge more," he says.

The chip makers themselves recommend independent software vendors continue with per-processor licensing, a factor that helped Microsoft reach its verdict to continue licensing software by the processor. But BEA and other software vendors say they're taking their logic from the chip vendors' own pricing practices - chip makers have indicated they will charge 30% to 40% more for their dual-core CPUs, says Kuldip Hillyer, BEA's strategic marketing manager. BEA has translated this to a 25% premium in software prices.

Money on the table?

Indeed, you have to wonder whether Microsoft is leaving money on the table by not charging for what is architecturally two processors in one. But the company's stance actually might have the opposite effect. "Especially if other vendors continue to charge per core, Microsoft can make up the potential lost revenue by gaining market share," says Alvin Park, a research director at Gartner.