®

IBM Software

© 2006 IBM Corporation

Processor Value Unit Licensing for Middleware

Evolving The Structure To Provide a Foundation For The Future

Customer Presentation

IBM Software

2

Agenda

Historical perspective on the middleware software licensing environment

Current middleware software licensing approaches

New IBM licensing approachWith no price changes

Benefits of the new structure

IBM Software

3

Middleware Is Licensed In Primarily Two Ways

In general, two licensing models predominate today:

Per User

One license per user20 users = 20 licenses

Per Processor

Historically, one license per processor4 processor cores = 4 licenses

ProcProc

ProcProc

IBM Software

4

Current Marketplace for Per Processor Licensing

More complex licensing structures Unique licensing requirements for differing

technologies Fractional licensing to provide necessary granularity

Uncertainty of licensing for multi-core technologies

Multi-core technology has created a number of challenges for customers

IBM Software

5

Single-core Chip

Processor Core

Chip

Socket

1

Dual-core Chip

Processor Core

Chip

Socket

1 2

The core is a functional unit on which software executesMulti-core chips have more than one processor core on the chip

Processor Definition is Important in Middleware Licensing

IBM defines processor = coreAs do most Middleware Vendors…eg. Oracle and BEAHowever, some Hardware Vendors . . . Intel, AMD, and

Sun define processor = chip

IBM Software

6

Processor Cores Are Not All Created Equal Today

1 Core1 Core

Same Workload

1 Core 1 Core 1 Core

1 Core 1 Core

1 Core

1 Core

The number of processor cores required for a given workload varies by processor technology

IBM Software

7

Core Disparity Will Increase In Future

The performance gap is growing between processor core technologies as a result of diverging strategies

Core performance improvement Flat core performance, but increase cores per chip

Cor

e Pe

rfor

man

ce

Time

One Processor Core

Improve Core Strategy

Multi-core Strategy

CoreDisparity

IBM Software

8

Customers Want More Licensing Granularity

Leverage the performance of the processor core

Increasing interest in virtualization

Enables consolidation and the adoption of new hardware technologies Sub-capacity licensing

Server

1 DB2 License Required

2 Chips4 CoresAppl DB2Appl Appl

IBM Software

9

Middleware Vendors Differentiate by Processor Type . . .

. . . Adding complexity to middleware licensing

RISC Dual-coreSingle-core x86 Dual-core Sun Octi-core

* Microsoft per processor entitlements are derived from their per chip licensing.

Effective License Entitlements per Processor

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

IBM Software

10

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 of License & Maintenance for 12 months

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

11

In Today’s Environment, the Marketplace Needs

SimplicityObtain benefits of fractional licenses without calculating fractions

More flexibility through granularityEspecially for multi-core chipsLeverage sub-capacity licensingContinued software price performance improvements

Clarity in the licensing structure

IBM Software

12

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

13

Processor Value Unit Licensing has Simple Conversion

Current per Processor Entitlements x 100

= New Processor 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

IBM Software

14

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

15

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

16

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

17

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 simplicity Will publish all Processor Value Unit requirements

New StructureValue Unit

Processor EntitlementsChip 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

18

Processor “Value Unit Calculator” Helps Determine License Quantities Passport Advantage Online contains a link to the processor “Value Unit

Calculator” Available to all customers with a Passport Advantage contract

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

19

Benefits Of The Processor Value Unit Structure

Creates simple licensing structure Avoids fractional licensing for multi-core chips

Provides flexibility and granularity Enables sub-capacity licensing at processor core Positions for future

Continue to deliver software price performance improvements Licenses are transferable across distributed systems

Provides clarity to middleware licensing Over time, new processors will be differentiated based on relative performance No price changes for middleware on existing processors

IBM Software

20

Your nameYour title

Processor Value Unit Licensing for Middleware