© 2006 IBM Corporation

IBM Software Think!Thursday

Processor Value Unit Licensing Kickoff July 27th, 2006

IBM Think!Thursday Sales Enablement SeriesIBM Think!Thursday Sales Enablement Series

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Software Group

© 2006 IBM Corporation

IBM Virtual Innovation Center Think!Thursday Details

Presentation and Audio replays available from the IBM Virtual Innovation Center (http://www.ibm.com/partnerworld/vic)

VIC Think!Thursday access instructions:– Must add Think!Thursday to your VIC profile

– After logging in, select Product selections from the left hand navigation bar– Select “Add a product”– Select the Software Brand “Think!Thursday sales series” of your choice and click Submit– Refresh by clicking on the VIC link at the top of the left hand navigator.

– To access Think!Thursday from the VIC – After logging in, select “Selling Resources” from the left-hand navigation bar– Select the Software Brand “Think!Thursday sales series” of your choice from the Sales &

marketing section

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Software Group

© 2006 IBM Corporation

IBM Think!Thursday Program Information

Think!Thursday Presentations and Audio Replays on the VIC– Overview Tab / Upcoming Events by Software Brand

– Find upcoming sales series details and presentations prior to the event– Overview Tab / Current Replays subsection by Software Brand

– Find current month’s sales series previously held including presentations and audio replays– Resides here for 1 week after live call, then located under Education Tab.

– Education Tab by Software Brand– Find archive of all prior IBM Software brand sales series presentations and audio replays

IBM Think!Thursday schedule of events– IBM Virtual Innovation Center (Upcoming Events)

– PartnerWorld Marketing and Enablement calendar

Think!Thursday Program Feedback – Program Managers:– Alex Kaplin (akaplin@us.ibm.com)

– Amy Malkasian (amalkasi@us.ibm.com)

– Mike Ryan (meryan@us.ibm.com)

IBM Software

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Processor Value Unit Licensing Executive Kickoff

Brigitte Acke, IBM AP Software Channel Sales Executive

®

IBM Software

©2006 IBM Corporation

Processor Value Unit Licensing for Middleware

Evolving the Structure to Provide a Foundation for the Future

Processor Value Unit Overview Education

July 27, 2006

IBM Software

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General Education Agenda

What is this Announcement

Software Licensing Background

Changing Processor Technology

Software Vendor Licensing Response

Processor Value Unit Licensing

Summary

IBM Software

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What is this Announcement?

A licensing structure and strategy for per processor priced middleware in Passport AdvantageSimple conversion from current licensing

Effectively software prices do not change for existing processors

Announced and GA’d on July 25, 2006

IBM Software

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Per Processor Software Licensing Historically, one license

entitlement for each processor core in the server

A significant number of SWG middleware products use per processor licensing

Core Core

Core Core

Server

4 Entitlements Required

Revenue is split fairly evenly between x86 and RISCDouble digit growth on x86

SWG Revenue on x86 vs RISC Platforms

x86 RISC

Intel XeonAMD Opteron

IBM PowerSun SparcHP PA RISCHP Itanium

IBM Software

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What Exactly Is the “Processor”

Single-core Chip

Processor Core

Chip

Socket

1

1

1

Dual-core Chip

Processor Cores

Chip

Socket

1

1 2

2

1 2

IBM defines processor = core

The number of processor cores required for a given

workload varies by processor technology

However, Not All Processor Cores Are Created Equal

1 Core1 Core

Same Workload

1 Core 1 Core 1 Core

1 Core 1 Core

1 Core

1 Core

IBM Software

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Historically, Fewer Processor Cores are Needed over Time

Faster processor cores are capable of running

more work

IBM Power processor core performance increasing

Intel / AMD processor core performance is expected to be flat

Processor Core Disparity Will Increase

1 Core

Constant Workload

1 Core

1 Core

1 Core

1 Core

4 Proc

Year 1

1 Core

1 Core

Year 3

Year 52 Proc

1 Proc

Co

re P

erfo

rman

ce

Time

One Processor Core

Improve Core Strategy

Multi-core Strategy

CoreDisparity

IBM Software

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This Has Added Complexity To Software Licensing . . .

IBM has three different middleware per processor core license entitlement

levels today

Software Vendors Are Differentiating by Processor Type

On x86 dual-core chips, 0.50 license entitlements are required per processor

(IBM per processor policy for x86 dual-core is “1 entitlement for 2 cores”)

x86 Server

2 Entitlements Required

X86 X86

X86 X86

2 Dual-core Chips 4 Processor Cores

(Result: fractional licenses) * Microsoft per core entitlements are derived from their per chip licensing.

Chip Type IBM Microsoft* Oracle BEA

Single-core (All Chips) 1.00 1.00 1.00 1.00

RISC Dual-core 1.00 N/A 0.75 0.50

x86 Dual-core 0.50 0.50 0.50 0.50

RISC Sun T1 Octi-core 0.38 N/A 0.25 0.25

Effective Entitlements Per Processor

IBM Software

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. . . And gets even more complex over time

“. . . [this Licensing approach is] tactical, not strategic or visionary… this model will not scale to address 16 core environments that will be commonplace…by 2010”

(Source: Gartner Group, “Oracle Announces New Multicore Pricing and Licensing” 2/06)

And Customers Want Licensing Granularity

Future Server

?? Entitlements Required

Demand ability to license to the processor

core – or below

RISC Server

1 DB2 License Required

1 Chip16 Cores

2 Chips4 CoresAppl DB2Appl Appl

XXXXXXXXXXXXXXXXXXXXXX

4

8

12

16

3

7

11

15

2

6

10

14

1

5

9

13

IBM Software

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Customer Focus Should be on the Total Effective Price

License requirements are only part of the effective price

Price per Processor = License quantity x Product price per License

* Suggested Retail Price

Chip Type IBM Microsoft Oracle IBM Microsoft Oracle

($K) ($K) ($K)

Single-core (All Platforms) 1.00 1.00 1.00 $36 $31 $49

RISC Dual-core 1.00 N/A 0.75 $36 N/A $37

x86 Dual-core 0.50 0.50 0.50 $18 $16 $24

RISC Sun T1 Octi-core 0.38 N/A 0.25 $14 N/A $12

Data Server - Enterprise Edition

Effective Licensing Per Processor Effective Price Per Processor *

IBM Software

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Marketplace Needs a New Licensing Structure

Objectives of Processor Value Unit LicensingIndustry licensing leadership with sustainable structure

Balance simplicity with granularity

Simple structure and conversion No price changes for software on existing processors

Maintain license scalability and transferability

Minimum change, keep new license & maintenance renewal structure

More granular and avoid fractional core licensing More flexible pricing to address disparate core performance

Particularly for multi-core chips

Enable sub-capacity processor licensing to the core

Continue to deliver software price performance

Clarity in licensing structure

IBM Software

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Introducing Processor Value Unit Licensing

Middleware will be licensed in processor value units Each processor core assigned a specific number of processor value units

Acquire the appropriate number of value units for each processor core Each middleware program has a unique price per value unit Processor value units are transferable among systems by product within the enterprise

* Power PC 970 and Power 5 QCM dual-core chips require 50 Value Units** T1 entitlements per processor adjusted with the elimination of fractional licenses.

New StructureValue Unit

EntitlementsChip Type Per Processor

Single-core (All Platforms) 100

RISC Dual-core * 100

x86 Dual-core 50

RISC Sun T1 Octi-core ** 30

IBM Software

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Processor Value Unit Licensing has simple conversion……

With the new structure, customers will acquire the

required number of processor value units for

each processor core

Server

30 x 8 = 240 value units

1 Octi-core Chip8 processor cores

T1

T1

T1

T1

T1

T1

T1

T1

…..And Avoids Fractions

Current per Processor Entitlements x 100

= New Value Unit Entitlements

New Structure"Old" Structure Value Unit

Entitlements Conversion EntitlementsChip Type Per Processor Factor Per Processor

Single-core (All Chips) 1.00 x 100 100

RISC Dual-core 1.00 x 100 100

x86 Dual-core 0.50 x 100 50

RISC Sun T1 Octi-core 0.30 x 100 30

* T1 entitlements per processor adjusted with the elimination of fractional licenses.

IBM Software

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Additionally, Simple Migration of Existing Entitlements

Existing Maintenance Processor Entitlements converted to Processor Value Unit Entitlements

Current Per Processor Entitlements x 100 = Processor Value Units Same conversion factor for all processor types

"Old" Structure New Structure

Per Processor MigratedEffective Effective Migration Value Unit

Entitlements Entitlements Conversion EntitlementsPer Chip Per Processor Factor Per Processor

Single-core (All Chips) 1.00 1.00 x 100 100

RISC Dual-core 2.00 1.00 x 100 100

x86 Dual-core 1.00 0.50 x 100 50

RISC Sun T1 Octi-core 3.00 0.30 x 100 30

* T1 entitlements per processor adjusted with the elimination of fractional licenses

*

IBM Software

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With No Price Changes for our Middleware for Existing Processors* Consistent conversion factor to create product prices

Both New Licenses and Maintenance Renewals

Current per Processor Price /100

= New Processor Value Unit Price

Customer price = # entitlements X price per entitlement . . . UNCHANGED!*

WebSphere Application Server Network Deployment on RISC Dual-core (2 cores)

Price per Entitlement

Number of Entitlements

Extended Price

Per Processor $15,000 2 $30,000

Conversion factor Divide by 100 Multiply by 100

Processor Value Unit $150 200 $30,000

* There may be slight changes due to rounding with the implementation of processor value units in some countries

IBM Software

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Processor Value Units Provide Flexibility Through Granularity

Value Unit Licensing at the processor core levelCapability to enable sub-capacity licensingGranularity to address changing technology

Flexibility to create new processor value unit levelsDeliver software price performance improvements

Time

Software price performance improvements will range over time depending upon a number of factors including market conditions

Processor core performance levels will vary between chip vendors Processor Value Units relative to core

performance

Processor Core Performance

Price Performance

# of Processor Value Units

IBM Software

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Increased Clarity as New Processors Will Be Assigned Processor Value Units

Deliver software price performance improvement

Over time, new processors will be differentiated based on relative performance, among other factors

Overall framework balances precision and simplicityNew Structure

Value UnitProcessor Entitlements

Chip Type Introduction Per Processor

Single-core (All Platforms) 100

RISC Dual-core 100

x86 (Intel / AMD) Dual-core 50

RISC Sun T1 Octi-core 30

Intel Itanium Dual-core 100

PowerPC 970 Dual-core 50

Power 5 QCM Dual-core 50

"'New" 2006

"Existing" Pre-2005

"'New" 2005

IBM Software

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Processor “Value Unit Calculator” is availableContains a “table” which indicates number of processor value units required

for each processor core of all available vendor chipsCalculates number of processor value units required for every hardware

environmentUsed to calculate price (number of value units X price per value unit)

“Value Unit Calculator” will be inserted in SWG supported toolsDistributed Software Price BookBP eOrderPA Online

Value Unit Table is downloadable from Lotus Notes Pricing Data Base for use with:User developed toolsVADS who do not use BP eOrder

Quote and Order Tools

IBM Software

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Processor Value Unit Calculator Helps Determine License Quantities

Passport Advantage Online contains a link to the processor Value Unit Calculator

New Tools to Determine Processor Value Unit License Quantities

Calculates number of processor value units required for every hardware environment

Used to calculate price (number of value units X price per value unit)

IBM Software

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Benefits Of The New StructureCustomer Provides granularity balanced with simplicity

Simple structure with easy conversion Maintains license scalability and transferability

Enables sub-capacity processor licensing to the core More flexible pricing to address disparate core performance

Delivers clarity and predictability No price changes for software on existing processors Continue to deliver software price performance improvements Over time, new processors will be differentiated based on relative performance

Sustainable licensing structure Addresses key marketplace needs with flexible structure

Sales Provides an opportunity to capture additional revenue as customers migrate licenses to

more powerful processors Software price performance improvements is managed Leverage flexibility and granularity to sell value with less discounting

IBM Software

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Processor Value Unit Part Numbers and

Pricing Implementation

IBM Software

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Processor Value Unit Part Numbers and Pricing Implementation

Established Processor Value Unit Part Numbers Replacing 1300+ Per Processor Part NumbersEach Per Processor Part Number is replaced by a Processor Value Unit Part Number

License plus 12 months Maintenance, Maintenance Renewal, etc.

Price and Passport Advantage Point Rounding U.S. Dollars and Passport Advantage points were rounded to nearest two decimals Some prices may be impacted +/- 1% by currency or country roundingPassport Advantage point rounding should not impact customer band level

Created packs of 10 Processor Value Units as the minimum order quantity for programs where:Per Processor License Plus Maintenance Price was less than US$1,250.00 Maintenance was less than US$250Simplicity was needed for billing and administration

For example, US$100/100 = US$1.00 and when discounted would be below $1.00

IBM Software

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Old New No

Part License Price Per Part License Price Per Price

Part Number Type Number Requirement Processor Number Requirement Value Unit Change

Lic + Maint. 12 months D5ALTLL 1.00 p/core $15,000 D55WJLL 100 p/core $150.00 $15,000

Maint. Renewal E1ALVLL 1.00 p/core $3,000 E025SLL 100 p/core $30.00 $3,000

Maint. Reinstatement D5ALWLL 1.00 p/core $9,000 D55WKLL 100 p/core $90.00 $9,000

New Part Numbers, but No change to Part Number Structure

WAS ND Processor

Part number structure unchangedLicense + 12 months of Maintenance Maintenance RenewalMaintenance Reinstatement

Part Number Structure Unchanged

Note: Example above assumes processor value unit assignment = 100 (eg. single-core chip type)

WAS ND Value Units

IBM Software

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Next StepsProcessor Value Unit Licensing sales kit (includes):

Scripted customer presentation English audio of this presentation (mp3 file)

Announcement letters

FAQs

Processor Value Unit table

Key terminology

Sales scenarios

Replacement part number file

Customer deliverables Overview presentation (no script)

English audio of this presentation (mp3 file)

Brochure

FAQ

IBM Software

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Reference Material

See the Processor Value Unit Licensing Announcement for Passport Advantage Middleware effective July 25, 2006 for more details. This, and other education material, will be available on the Passport Advantage web site

Questions should be directed through the normal software support structure. If they are unable to answer a question, they will have access to the Processor Value Unit Licensing project office.

®

© 2006 IBM Corporation

IBM Software Group

IBM Business Partner Channel Sales Enablement Processor Value Unit Licensing

Michael Ryan, IBM Software Group Business Partner Enablement

meryan@us.ibm.com

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IBM Software

URL: http://news.yahoo.com/s/gizmodo/20060710/tc_gizmodo/intelplans32coreprocessorby20092010;_ylt=Aqw8rgw0RBX.icu3VMJVZiEjtBAF;_ylu=X3oDMTA0cDJlYmhvBHNlYwM-

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IBM Software

IBM Business Partner Sales Enablement

AnnounceJuly 25

July August

IBM Think!Thursday Sales Series Kickoff

July 27th

IBM Business Partner Processor Value Unit Sales Skills Training

Aug 2nd

Legacy Passport Advantage P/N overlap and availability

NovemberOctober

32

IBM Software

Processor Value Unit Sales Skills Training

• Sales skills enablement• Processor Value Unit technology education• Sales scenarios• Sales tools

• Value Unit calculator

• Conference call schedule• AP Geography:

• Date: August 2nd, 2006 at 12:00 PM [(GMT+08:00) Kuala Lumpur, Singapore]• Conference call details link

• Americas and Europe: • Date: August 2nd, 2006 at 11:00 AM [(GMT-05:00) Eastern Time (US & Canada)] • Conference call details link

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IBM Software

Software Sales Deliverables

Processor Value Unit Resources for Business Partners Announcement Letter July 27th Processor Value Unit Licensing for Middleware Kickoff

audio replay available 3 days after event August 2nd Processor Value Unit Sales Skills Training

audio replay available 3 days after event Processor Value Unit License Structure Overview Sales Scenarios FAQs Customer Resources

Processor Value Unit Calculator

Passport Advantage Online for Resellers IBM ID and password required

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IBM Software

Call to Action

Attend the July 27th IBM Think!Thursday Processor Value Unit Licensing for Middleware Kickoff

Attend the August 2nd IBM Business Partner Processor Value Unit Sales Skills Training conference call

Review the software sales deliverables available at the Processor Value Unit Resources for Business Partners website

Contact your IBM Software Distributor , Techline, or IBM Business Partner sales representative for additional details and questions

IBM Software

www.ibm.com/software

Polling Questions

The content for this web conference was at the appropriate level. • Excellent (*1) Good (*2) Fair (*3) Poor (*4)

Overall web conference rating

• Excellent (*1) Good (*2) Fair (*3) Poor (*4)

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Press *1

Please be sure your phone’s mute function is turned off when asking your questions!

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MerciGrazie

Gracias

Obrigado

Danke

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IBM Think!Thursday ScheduleIBM Software Think!Thursday Aug 24th (11 AM ET) Title To Be Announced

Date Title

Aug 3rd IBM Tivoli Think!Thursday (11 AM ET) Tivoli Mid-market Solutions: Update on the Express (SMB) Portfolio

IBM WebSphere Think!Thursday (1 PM ET)The Benefits, the Value and Achieving SOA Certification Status

Aug 10th IBM Rational Think!Thursday (9 AM ET)

Automated Software Quality

IBM Information Management Think!Thursday (11 AM ET) Title To Be Announced

Aug 17th IBM Lotus Think!Thursday (11 AM ET) Web Content Management

IBM Software

www.ibm.com/software

IBM Software Think!Thursday replays available on the

VIC (Virtual Innovation Center)

June 22nd Autonomic Problem Determination

May 25th Passport Advantage Changes in the Distribution of Renewal Quotes

April 27th IBM’s Software Acquisition Strategy

March 23rd IBM Software Group’s Business Partner Software Value Incentive Program

Feb 23rd How & When to Access Pre- and Post-Sales Business Partner Support

Jan 26th 2006 Business Partner Channel Strategy