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April 25, 2005
One Chip, One License
Posted by Dana Blankenhorn
Now that dual-core chips are a reality (to be followed in time by four-core, eight-core, etc.) software companies face a dilemma on pricing. (Picture from AMD.)
Traditionally software companies have priced per-processor. But if a single chip has multiple processors, which could be doing different things, then shouldn't you require two licenses?
Answer: no.
I don't think we're going to have to go into a big political argument here, either.
Both AMD and Intel are moving to multi-core technology. It's going to be mainstream. Those software outfits that think they can double or quadruple their prices based on the chip being used by their customer are going to lose market share, fast, to companies that say one processor, one license.
This is going to be a short-lived controversy.
Comments (1)
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Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Brad Hutchings on April 26, 2005 03:08 AM writes...
You'd think Dana pays me to disagree with him, but I assure you all, it isn't true.
First off, we're talking about commercial data processing software (mostly) if having a multi-core processor matters. Writing any software that can take advantage of symmetrical multi-processing (SMP), whether with multi-processors, multi-cores, or distributed clusters is really freaking difficult (although I'm sure all the guys with degrees in poetry who can recomile their Linux kernel in another thread write such software in their sleep, haha), so software that might take advantage of SMP isn't going to be cheap to begin with.
Second, when software isn't boxed and cheap, the sales goal is to extract as much money out of each individual customer as possible while keeping each customer's long term costs (support, training, etc.) as low as possible. Price lists get complicated and arbitrary to, well, confuse the customer. Per processor pricing is one of these mechanisms. Add up all the list price component costs, throw in some freebies, figure out where the customer's breaking point is, apply a discount, everyone feels like they got a great deal.
Third, per-processor pricing has worked because of how SMP works. The software could limit the number of concurrent threads to the purchased number of processors. Since each processor could run one thread at a time, the restriction was easily enforceable. Well, multicores work the same way. Each core can execute one thread at a time, though it can switch among many threads to yield multi-threading. So while per-processor pricing might have to go away because everyone will ask "what is a processor?", the replacement will be the same exact thing: concurrent thread pricing.
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