Hardware advances have potential to raise software license costs
Staff -- Manufacturing Business Technology, 3/1/2005 12:00:00 AM
Given offshore software development and open-source computing, manufacturers may expect their software licensing costs to track downwards. They could be in for a shock.
According to analyst group Gartner, Stamford, Conn., there's a very real risk that software license costs could increase by 50 percent or more by 2006. That's because traditional means of calculating license costs don't take into account four recent trends in hardware development.
Ostensibly, these trends are good news: more bang for the hardware buck. But the implications of multicore chip architectures, rapid provisioning tools, virtualized servers, and standby servers to support capacity on demand aren't covered in the small print of most license agreements. To many software vendors, a two-core chip looks conveniently like two processors, says Alexa Bona, a Gartner research director.
What's more, although license costs might double, multicore architectures don't necessarily double a system's performance, warns Bona. "If an upgrade to a new dual-core design offers only a 50-percent improvement, then doubling the license fee becomes a tax on technology innovation with little return."
What's especially invidious, she adds, is that the option of staying with single-core architectures is rapidly running out. By as early as 2006, these single-core chips may be phased out—at which point, says Bona, unless events intervene, "many enterprises will be paying at least 50 percent more in software fees to mainstream vendors that license by CPU."
Similar arguments can be made for each of the other advances, Bona adds. "On their own, each represents a challenge to fair and acceptable pricing. All four happening at the same time is a recipe for software mayhem."
Advocating that enterprises start talking tough with software suppliers—and soon—Bona warns that so far, among the major vendors, only Microsoft has made a move in the right direction by vowing to charge based on physical CPUs, not logical cores.
