The company on Tuesday clarified its policy regarding so-called multi-core processors, in which two or more processors are etched onto a single piece of silicon. Microsoft's move is expected to add competitive pressure to other companies, many of which have taken the approach of charging more for software that runs on servers equipped with dual or multi-core chips.
Microsoft, like other software providers, prices many of its server software products, such as Microsoft's SQL Server database and BizTalk integration package, on the number of processors. That long-standing licensing convention is being challenged by the arrival of multi-core processors, which are moving into mainstream use.
Chip makers have adopted the multi-core technique as a way to keep processors from overheating. Intel, for example, recently decided to halt development of its 4-gigahertz Pentium 4 chip, which produced too much heat from the fast internal clock rate, in favor of other means of boosting overall performance.
Intel and AMD said they intend to deliver dual-core processors for servers by next year. IBM, Hewlett-Packard Sun Microsystems already have chips with dual cores and plans for chips with 4, 8 or 16 cores are under development.
Microsoft said that sticking to its current per-processor licensing practice, regardless of the type of processor, will make its pricing more predictable and consistent for its customers and partners.
"We don't believe that charging for chip processor improvements is in the best interest of the industry," said Cori Hartje, director of marketing and readiness in Microsoft's worldwide licensing and pricing group.
Microsoft stands in contrast to some of its large competitors. Oracle and IBM have adopted a policy of charging customers the cost of two processors for a server equipped with a dual-core chip.
Other companies have taken the same side as Microsoft. Chip makers Intel and AMD recommend a policy of counting a processing module -- which may include more than one core -- as a single processor for software licensing. An Intel executive praised the software giant's decision.
"As we begin driving multi-core chips into the broader market, the absence of a move like this from Microsoft would make things very difficult," said Richard Dracott, general manager of marketing and planning for Intel's enterprise platforms group.
Intel prefers to define a processor as that which plugs into a single socket in a circuit board, Dracott said. That means a dual-core chip that can execute four simultaneous threads, or instruction sequences, would count as a single-core processor.
Like Microsoft, Novell sells its SuSE Linux software on a per-processor basis. Novell has said it will charge customers for a single licence on dual-core machines, though it may reassess its practice, according to a spokesperson. Java server software maker BEA Systems has put forth a plan to charge a 25 percent premium over its standard per-processor fee for software that runs on dual-core servers.
Microsoft's policy will give it an advantage over competitors, said Julie Giera, an analyst who specialises in licensing at Forrester Research.
"The customer ends up getting the processor speed that they get today and probably 60 to 70 percent more power. And as far as Microsoft licensing is concerned, they will only pay for one chip set, which is a good deal," Giera said.
Microsoft customers may still end up paying a premium because server manufacturers could still charge more for their dual and multi-core processor servers, Giera noted. She said that initially these high-end machines will appeal to large customers who demand the latest, most powerful machines.
Other emerging technologies are expected to further muddy the licensing picture. So-called virtualisation software allows companies to run different operating systems and applications separately on a single physical server. "Virtualisation is the next challenge for all these firms," Giera said.
CNET News.com's Stephen Shankland contributed to this report.
