IBM changes dual-core pricing for new AMD chips

IBM changes dual-core pricing for new AMD chips

In a change of policy, IBM says it will not license software for dual-core x64 servers on a per-core basis.

Should a dual-core processor count as one chip or two? IBM and Advanced Micro Devices (AMD) provided two very different answers to that question as the two companies unveiled contrasting pricing strategies around AMD's dual-core processors.

IBM broke with its long-standing dual-core pricing policy and said it would charge the same price for software licenses for single-core and dual-core AMD systems.

AMD, on the other hand, took the launch of the dual-core chips as an opportunity to significantly hike the price of its high-end Opteron processors.

Unveiled this week, the dual-core Opterons are AMD's first products to contain two separate processing engines, or cores, on a single chip. The first three of these chips, which are targeted at servers with four processors, will begin shipping over the next few weeks in products such as HP's ProLiant BL45p and DL585 systems and Sun's Sun Fire V40z servers.

At present, IBM has committed to shipping the dual-core Opteron in only one server product, the IBM eServer 326, which is designed for technical and high-performance computing users.

IBM has not said when it expects to ship a dual-core version of the eServer 326.

Still, Big Blue's announcement is good news for WebSphere and DB2 customers who may be looking at the dual-core Opterons. IBM has been offering dual-core versions of its Power processor for several years now, but it has licensed the software on a per-core basis.

With Opteron, and Intel's upcoming dual-core server processors, customers would buy licenses for each processor, not each core, an IBM spokesperson, Ari Fishkind, said.

"For the newer first-generation Opteron and Xeon chips that are now emerging, the advances in power are incremental," he said. "We think they are terrific chips and offer a lot of potential, but for now most customers will not be fully exploiting the chips' performance."

AMD sees things differently. "If you look at some of the benchmarks, you'll see the utility that we're delivering with the processor. What we're trying to do is price for the utility that we deliver," a senior software strategist at AMD. Margaret Lewis, said.

The top-of-the-line dual-core Opteron lists for $US2649, more than $US1000 above the price of AMD's highest performing single-core Opteron.

Enterprise software vendors have developed dual-core licensing policies in the Unix market, which has already seen dual-core systems from a number of vendors. But with the Opteron servers now hitting the market, software companies would need to take a hard look at whether they had to change pricing models for the lower-cost Linux and Windows market, director of software pricing and licensing with IDC, Amy Konary, said.

"The argument becomes, 'How much more value are you going to get out of your software for having this additional core?'" Konary said. "There's been a lot of customer concern that having the dual-core is not going to double the value of the software."

Another question ahead is how software vendors will license dual-core systems based on Intel's Itanium 2 processor.

IBM's Fishkind could not say whether IBM intended to apply the per-core licensing model to Itanium.

In fact, IBM reserved the right to change its dual-core licensing strategy for AMD or Intel systems, Fishkind said.

"By all rights it should be considered as two processors," he said of the dual-core Opteron.

Microsoft, which has already stated that it will not license its software on a per-core basis, confirmed that this policy would apply to "x64" Opteron and Xeon systems as well as Itanium.

"Microsoft's multicore licensing policy is the same, per processor regardless if it's x64 or dual-core Itanium," a Microsoft spokesperson said.

Oracle, which has long said it intended to retain its policy of licensing dual-core systems on a per-core basis, might be the ultimate target of IBM's pricing strategy, editor-in-chief of Microprocessor Report, Kevin Krewell, said.

"This is all going to put pressure on Oracle, especially in the [x64] server space, where there's a lot of competition," he said. "Oracle's got to decide for themselves what kind of pain they're willing to take."

(Joris Evers contributed to this story.)

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