However in the case of the first x86 dual core chips, most customers will not immediately use the chips' potential according to IBM and so it will "license x86 dual-core (and lower-end IBM OpenPower dual core chips used in Linux servers) as if customers were using the equivalent of only one processor license".
There is no single strategy covering software pricing on dual-core machines. Microsoft's is most generous, Oracle's most restrictive and IBM tries to read a middle course. The rest of the software industry is struggling with the same issue.
In October 2004 analyst Gartner argued that "ISVs need real performance metrics from hardware vendors to understand how to adjust pricing based on realised performance". Based on this "some vendors may choose to have special pricing to fairly account for multicore designs" which is the Oracle and IBM (on high-end Power systems) approach while "some may choose to price per-processor", the Microsoft and low-end IBM approach.
Gartner predicted that "by year-end 2005 at least three major ISVs will adjust their pricing so that per-processor pricing does not equal per-core pricing". Up to recently, Microsoft was the sole, major ISV to jump to per-processor pricing with IBM taking a half-step. In a bold move, the virtual infrastructure software supplier, VMware, joined fray. The company announced that its entire range of server virtualisation products would support dual-core processors and server products would be priced on a per-processor basis.
Virtual machines virtualise hardware so that multiple operating systems can be partitioned and dynamically scale the power available to any of the hardware resources. The more hardware available to use, the more partitions and the greater the flexibility that the virtual machines have, so virtualisation and multicore are two technologies that fit naturally together.
"Given the tremendous processing capabilities of dual-core systems, they are a sweet-spot for virtualisation," said Jeffrey Engelmann, VMware's executive vice-president of marketing. "Anyone deploying a dual-core system should implement... virtual infrastructure to harness the full potential of this enhanced capability."
VMware already supports dual-core system with GSX Server 3.2 and the client software VMware Workstation and ACE while the next releases of ESX Server and VirtualCenter will also support dual-core. It is perhaps not surprising that VMware should move quickly to embrace multi-core processors.
But while VMware's decision to welcome multicore was perhaps predictable given the natural fit between virtualisation and multi-core it was also helped by Microsoft's adoption of multicore. VMware's main competition comes from Microsoft Virtual Server 2005, as well as from the open source firm XenSource.
Multicore processors and virtualisation are two strands of development running through the marker which will contribute to what James Governor, of analyst firm Red Monk, describes as "the perfect storm set to engulf software". He claims the technology's impact software pricing will continue to gain momentum and anyone negotiating with application vendors needs to consider its impact. "They should closely scrutinise attempts by suppliers to lock them into long term deals using traditional pricing models, such as per processor pricing. End users might even consider get-out clauses in deals, to prevent long-term lock in," claims Governor.
The disruptive effect of multicore technology may seem intimidating but in the long term it should give users much more scope to negotiate with suppliers according to Governor. "Software vendors might not like it", says Governor, "but they are the masters of sneaky contractual clauses, so a dose of their own cod liver oil might not go amiss."
