"IBM is committed to making software licensing as simple as possible," says Thomas Gregers Honoré, IBM's European manager for data management. "We have tried, where possible, to tie licences to servers rather than to the desktop."
Honoré says this is the philosophy across most platforms from Unix and Windows NT to Linux. However, the mainframe stands alone. According to Honoré, there are several reasons for the change.
He says, "It is much easier to keep track of the amount of processors [an IT manager] has working in each server than to keep tabs on the amount of end devices he has running a specific application, especially with the proliferation of laptops and handheld devices.
"Also, it was recognition of the way computing was heading - away from the client/server model towards networked and Internet computing. If you price your software per user, things start to get complicated if an application is Web-based.
"With an application used in-house the IT manager will have a good idea of how many users he has but when it is extended out to the Web there is no way he can accurately gauge the number of users." In a popular Web site the number of users can increase by half a million in one day, he says.
"It was simply a matter of getting the message across in plenty of time so that our customers were not confused," says Honoré. "People are not averse to new ideas, they just need them clearly explained. "A few years ago it was not common to talk about e-business, for example. Now it is old hat."
Honoré is primarily concerned with IBM's DB2 database product. DB2's pricing model was shifted from user to processor licensing about 18 months ago to reflect the increasing use of DB2 at the back-end of Web applications.
He is surprisingly candid about price. "The standard price per processor, per year on an NT machine is $17,600, although there is a workgroup edition which starts at about $1,000 for four processors."
But how did IBM come up with such a figure? "We have to consider the research and development costs. For example, IBM took out 900 patents for database technology last year - add to this the costs of sales and marketing and distribution."
He adds, "We also look at the competition and at feedback from our customers who have been trialling beta versions of the software. From all these inputs we can get close to coming up with a fair price."