SW license to cost 50 percent more: Gartner

Enterprises worldwide could see their software licensing costs increase by at
least 50 percent by 2006 unless they act soon to renegotiate existing contracts.
Speaking at its annual Sym-posium/ IT Expo, Gartner said that this is because
four emerging trends in hard-ware threaten the traditional pricing model used by
Oracle, IBM, Sybase and many other software companies based on microprocessor
capacity.

Software companies gene-rally charge for the total pote-ntial capacity of a
central processing unit (CPU), without regard to what is used. There typically
is no recognition of the utility-based pricing approach.

The emerging trends inc-lude multi-core chip archite-ctures, rapid
provisioning and capacity on demand hardware solutions.

Although these develop-ments can reduce hardware costs, software license
charges have not been addressed. Moreover, no mechanism is in place for software
vendors to measure when and for how long these temporary COD processors were
active.

Consequently, potential savings in hardware can be eliminated by rising
software fees based on the total potential capacity of any system.

Most users we speak to are aware of one or two of the four trends
individually, but not of the combined impact," said Butler.
"Enterprises need to address this convergence rapidly. By year-end 2006,
the manufacture of single-core chips will end. If contracts or pricing policies
on this issue alone are not addressed, enterprises will have no option but to
pay significantly more. Single core systems will not be available."

According to VP Distingui-shed analyst at Gartner Andrew Butler, many vendors
are still undecided as to what their policy will be. "For this reason,
Gartner said customers should initiate discussions now with vendors to
accelerate pricing policy changes. Some vendors have already reacted positively
to discussions of this nature," he added. (CyberMedia News)