IBM Will Base Software Price on Processor Performance

IBM plans one day to charge for its software based on how fast it runs, not the number of processor cores on which it’s running. The company announced licensing changes for its middleware Tuesday, although the change will have no immediate effect on pricing.

Increasing use of technologies such as virtualization, grid computing and multicore chips are making per-processor licensing too complex, IBM spokesman Jeff Tieszen said Tuesday.

Some software vendors charge twice as much to run their software on a dual-core processor as on single core, while others base their prices purely on the number of processors. IBM has played it both ways, charging double if the dual-core chip is based on its Power architecture, but not differentiating between single-core and dual-core x86 chips.

In future, IBM plans to simplify things, setting license costs according to the performance of the processors running the software. “We want customers to think in terms of ‘processor value units’ instead of cores,” Tieszen said.

Initially, a chip’s processor value unit rating will be based on its architecture and the number of cores it contains, he said. Dual-core Power5 chips will be rated at 200 processor value units (100 per core), while x86 processors will score 100, whether they have one core or two. Full details of the rating system can be found on IBM’s website.

As of today, “This is not a pricing action. We aren’t changing prices,” Tieszen said.

However, beginning with Intel’s quad-core Xeon processor, due around the end of this year, new processors will be rated according to their performance, he said. The company will calculate its own benchmarks and validate them against independent third-party data provided by Ideas International, he said.

The move toward performance-based software pricing is inevitable, Tieszen said. “This is where the industry is headed.”

IBM’s move may one day make its own price list easier to read, but it won’t make heterogenous systems any easier to cost.

“We can’t tell the other vendors how to do their pricing structure,” he said, adding that he didn’t know whether IBM had sought support from other vendors for its plans.

IBM will apply the new licensing rules to all its middleware products except Tivoli Storage Manager and the Ascential portfolio, it said.

-Peter Sayer, IDG News Service (Paris Bureau)

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