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Martin LaMonica

Staff Writer, CNET

Taking a stand on what has become a contentious issue, Microsoft on Tuesday said it will count new multicore processors as single units when they debut next year.

The announcement clears up confusion surrounding Microsoft’s policy regarding so-called multicore processors, in which two or more processors are etched onto a single piece of silicon.

Microsoft’s move is expected to add competitive pressure to other companies, many of which have taken the approach of charging more for software that runs on servers equipped with dual or multicore chips.

Like other software makers, Microsoft prices many of its server software products, such as Microsoft’s SQL Server database and BizTalk integration package, on the number of processors. That long-standing licensing convention is being challenged by the arrival of multicore processors, which are moving into mainstream use.

Chipmakers have adopted the multicore technique as a way to keep processors from overheating. Intel, for example, recently decided to halt development of its 4 gigahertz Pentium 4 chip, which produced too much heat from the fast internal clock rate, in favor of other means of boosting overall performance.

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Intel on Monday said it plans to deliver its first dual-core Xeon processor in the first quarter of 2006. A competing chip from rival Advanced Micro Devices will likely arrive several months earlier.

IBM, Hewlett-Packard and Sun Microsystems already have chips with dual cores, and plans for chips with 4, 8 or 16 cores are under development.

Microsoft said that sticking to its current per-processor licensing practice, regardless of the type of processor, will make its pricing more predictable and consistent for its customers and partners.

“We don’t believe that charging for chip processor improvements is in the best interest of the industry,” said Cori Hartje, director of marketing and readiness in Microsoft’s worldwide licensing and pricing group.

Beware of the fine print
Microsoft’s stance on multicore licensing contrasts with that of some of its large competitors. Oracle and IBM have adopted policies of charging customers the cost of two processors for a server equipped with a dual-core chip.

Other companies have taken Microsoft’s side on the issue. Novell sells its SuSE Linux software on a per-processor basis and has said it will charge customers for a single license on dual-core machines, though it may reassess its practice, according to a representative. Java server software maker BEA Systems has put forth a plan to charge one and a half times the standard per-processor fee for software that runs on dual-core servers.

Chipmakers Intel and AMD recommend a policy of counting a processing module–which may include more than one core–as a single processor for software licensing. An Intel executive praised the software giant’s decision.

“As we begin driving multicore chips into the broader market, the absence of a move like this from Microsoft would make things very difficult,” said Richard Dracott, general manager of marketing and planning for Intel’s enterprise platforms group.

Intel prefers to define a processor as that which plugs into a single socket in a circuit board, Dracott said. That means a dual-core chip that can execute four simultaneous threads, or instruction sequences, would count as a single-core processor.

Microsoft’s policy will give it an advantage over competitors, said Julie Giera, an analyst who specializes in licensing at Forrester Research.

“The customer ends up getting the processor speed that they get today and probably 60 to 70 percent more power. And as far as Microsoft licensing is concerned, they will only pay for one chipset, which is a good deal,” Giera said.

Microsoft customers may still end up paying a premium because server manufacturers could still charge more for their dual-core and multicore processor servers, Giera noted. She said that initially these high-end machines will appeal to large customers who demand the latest, most powerful machines.

Other emerging technologies are expected to further muddy the licensing picture. So-called virtualization software allows companies to run different operating systems and applications separately on a single physical server. “Virtualization is the next challenge for all these firms,” Giera said.

CNET’s Stephen Shankland contributed to this report.