CIO — Despite its recent acquisition of second-tier virtualization software developer Virtual Iron, Oracle has yet to move into the century of the virtual server when it comes to the nitty gritty of supporting and licensing Oracle software running on virtual servers, analysts say.

While Oracle databases and applications will usually run on virtual servers—the point of x86-based hypervisors is that their virtual nature is invisible to the software running on them—Oracle has not certified any of its products to run on hypervisors other than its own, and hasnt changed its licensing to make virtualization any easier, according to Chris Wolf, analyst at the Burton Group, who recently blogged on this topic.

Essentially, if a customer encounters a known problem on a VMware ESX server, for example, Oracle support will provide the solution. If it's not a known problem, however, the customers either has to reproduce the problem on a physical server or solve it themselves— one of the most restrictive policies of any enterprise software vendor, Wolf says.

Even worse, Oracle's database licensing requires customers to either pin a database to a single processor—eliminating the benefit of being able to move a virtual server from one physical machine to another—or buy a license for every processor on every physical server on which the database might run, Wolf says.

Running an Oracle database on a VMware ESX VM cluster made of two servers with four processors each would require eight licenses instead of just one, just in case the VM was shifted from one machine to another, or even from one processor to another.

There is a provision to allow customers to pay for only one processor, if the application can be pinned to that processor and not allowed to move even when that machine has to be taken down for maintenance without incurring additional license fees, Wolf says. That amounts to a tax on customers who want to virtualized, he says.

"We've been having the licensing conversation with Oracle for some time on this issue, going back to when we were doing research for a report on it in 2007," Wolf says. "They understand the requirements customers face and, in my opinion, have made a conscious decision not to provide licensing that would be fair for virtualized environments in order to forestall adoption of virtualization."

Oracle's response to questions from CIO.com about its VM licensing was an e-mail with the following links to descriptions of its license pricing, both alone and with Virtual Iron products.

"This is not a new issue with Oracle," according to Gordon Haff, analyst at Illuminata. "People were complaining about Oracle pricing since long before virtualization came around. So the acquisition of Virtual Iron is more an acknowledgement that virtualization is key, not something that's going to get them to change faster. "

Oracle will, inevitably, change its licensing to be more friendly to virtual infrastructures, Haff says, because it has no choice. All software is going to have to be priced in a way that is flexible enough for virtualized infrastructures, he says.

Right now, however, Oracle's refusal to license its software to movable VMs is evidence the company has "seen the potential for lost revenue and taken steps to prevent it before that happened," Wolf says.

"You compare that to a company like Novell—which redefined its OS licensing to let you get a subscription for a physical server and apply it to an unlimited number of virtual machines on that server," Wolf says. "Novell had close to a double-digit market-share gain in OS revenues last year because of that. They did very well by aggressively structuring licensing to take advantage of virtualization."

It's not good that Oracle is trying to stave off any impact virtualization may have on its revenues, but it's no surprise, either, Haff says.

"Oracle was one of the last major vendors to recognize and make accommodations for multicore systems as well," Haff says, referring to the early years of this decade, when Oracle, Microsoft and other server-software vendors tried charging per core and per processor as a way to increase revenue as the power of servers expanded and the number of them in data centers shrank. "[Oracle] still has this rather complicated pricing scheme that's a throwback; there are different multipliers for different kinds of processors, depending on what used to be called power factors."

It's not just the unfriendly pricing that's the problem, Wolf says. It's Oracle's almost sullen silence on the issue.

After Wolf wrote a blog post saying that, within limits, Oracle would provide de facto support for any vendor's hypervisors—a conclusion he reached after interviews with many Oracle executives— and pointing to a document confirming it, Oracle changed the document.

"They changed the whole article to say they would not support x86-based hypervisors," Wolf says. "To me that speaks for itself. It's not favorable to customers when software vendors do those things."

Burton Group has been advising clients to use databases or applications from other vendors where that is practical, though Wolf acknowledges he hasn't seen a major migration away from Oracle because of its VM licensing.

"In fairness to Oracle," Haff says, "it makes the kind of big applications that are among the last things in an enterprise to be virtualized. So you can overstate the impact of this. And a lot of Oracle's larger enterprise customers have various forms of site licensing, so per-core pricing and VM pricing wouldn't really change anything for them. "

That doesn't mean Oracle isn't being unresponsive or that it won't eventually have to change its licensing to follow the practices of its customers, however.

"They're not really going to have a choice, but right now it seems as if they're resisting making changes that will upset their current revenue stream," Haff says. "The bottom line is that Oracle is doing what it thinks is best for Oracle."

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