Microsoft to Change Server Software Pricing

New model could mean significant cost savings for customers that use partitioning

Microsoft Corp. plans to adjust its per-processor licensing model to provide relief for customers that run its software on partitioned servers, a Microsoft executive said last week.

On April 1, the company will introduce per-processor licensing terms for eight server products to provide a fairer option for customers that use partitioning, said Rebecca LaBrunerie, head of Microsoft's licensing program. Under the new system, businesses will pay for only the processors that the software runs on, rather than for every processor in a partitioned server, she said.

The change could lead to significant cost savings for customers that use partitioning to segregate applications running on a single multiprocessor server, said Alvin Park, an analyst at Gartner Inc. in Stamford, Conn. Some of those customers have complained that Microsoft's current pricing system requires them to pay a license fee for each processor on their servers, even though the software may not actually be running on all of them, Park said.

Using partitioning to cut licensing costs can be complex from a technology standpoint, but the new model offers the potential for big savings for some customers, Park said. The issue mainly affects customers that consolidate single- or dual-processor servers onto larger systems as a way of cutting hardware and systems management costs, he said.

LaBrunerie said the new model will be "a lot more fair and logical" than the current system for customers that use partitioning. Server consolidation is a growing trend among businesses seeking ways to cut IT costs, and the new pricing seeks to address that, she said.

More Flexibility

John Bielec, CIO at Drexel University in Philadelphia, said the new pricing structure will likely help the university cut costs as it continues to replace and consolidate servers.

The new pricing "will give us flexibility in terms of moving [Microsoft server applications] from smaller to larger servers and not getting hit with larger costs" for licensing, he said. Drexel uses two of the affected Microsoft server products, SQL Server 2000 and BizTalk Server 2002. Drexel replaces about one-third of its hardware annually, Bielec said, adding that he expects the savings from the new pricing structure to be reflected in his budget after July 1.

The model eventually will be extended to Microsoft's Windows 2000 server operating system, LaBrunerie said. The company recently acquired technology from Connectix Corp. in hopes of providing software that will let a single Windows server act as a series of separate machines. Microsoft will discuss pricing changes for Windows 2000 when that virtualization software is released, LaBrunerie said.

The new model will also apply to earlier versions of the eight Microsoft products affected by the change, although the company won't offer refunds to customers that have already paid for software they're running on partitioned servers. Those customers will be able to reuse licenses that are freed up by the new system, Microsoft said. For example, under the current model, a user running SQL Server on a partitioned eight-way server is paying for eight processor licenses, even though the software might be running on only four processors. When the new model kicks in on April 1, that customer will have four unused SQL Server licenses in hand, LaBrunerie said.

The changes apply only to customers on per-processor licenses and don't affect the client/server access license model, Park said.

Niccolai writes for the IDG News Service. Computerworld's Todd R. Weiss contributed to this report.


Microsoft Pricing

The changes will affect

SQL Server 2000

BizTalk Server 2002

Internet Security and Acceleration Server 2000

Commerce Server 2002

Content Management Server 2002

Host Integration Server 2000

Microsoft Operations Manager 2000

Application Center 2000

Copyright © 2003 IDG Communications, Inc.

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