Oracle proposes flat-rate licensing

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Oracle proposes flat-rate licensing

Cliff Saran
How Oracle's grid computing and licensing will affect the industry and users.

Oracle has hailed grid computing as the future of IT, but its success will depend on the company devising a software licensing model that allows users to pay only for the IT they use.

Under the current Oracle licensing model, users have to pay up-front for the maximum number of processors they will use.

Answering questions at the OracleWorld show in San Francisco, Oracle chief executive Larry Ellison suggested that a flat-rate fee should replace per-processor licensing. "It becomes very hard to count processors and to count users," Ellison said. "I think we will go towards enterprise licensing where you pay an annual fee and use as much software as you want."

Ellison said some Oracle customers were already paying for their software in this way, but did not say when Oracle would adopt this approach more widely.

Analyst Carl Olofson of IDC said, "The technology is ahead of the licensing. Paying a licence fee based on a per-processor charge does not make sense."

Olofson said Oracle 10g would allow users to add and remove applications easily, but that users should not be charged the full licence fee to run a 32-processor system if all 32 chips are only used four times a year.

Jacqueline Woods, vice-president in global practices at Oracle, told Computer Weekly that pay-per-use pricing was not the way forward. "The way licensing works today, you license the maximum number of processors," she said.

This is irrespective of whether this is based on peak usage or peak CPU utilisation. Volume licensing discounts make pay-per-use licensing an expensive option for users, she added.

Woods also suggested that there was little sympathy for flexible licensing at Oracle. "A user cannot say they are using 128 processors for 20% of the year and 82 processors for 80% of the year," she said. "Once a user has purchased the 128-processor licence, there is no way to scale back."

Some hardware companies, such as Hewlett-Packard, offer tools that measure the amount of CPUs an application uses within a given period.

However, Woods said she would only consider such tools if HP could show how it could measure Oracle usage across all makes of server in the datacentre, irrespective of whether they are from HP, IBM, Sun or a PC manufacturer such as Dell.

Whatever changes Oracle has planned for the future, the whole industry will need to reach a consensus on licensing before grid computing can take off.

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