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Issue of December 2004 
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Cost of software license may increase - Gartner

Gartner predicts that enterprises worldwide could see their software licensing costs increase by at least 50 percent by 2006 unless they act soon to renegotiate existing contracts. This is because four emerging trends in hardware threaten to upset the traditional pricing model used by Oracle, IBM, Sybase, and many other software companies based on microprocessor capacity.

The trends are:

1) The move towards multi-core chip architectures

2) The move to virtualize hardware resources across physical servers

3) Growing availability of servers to support capacity on demand

4) Increased interest in rapid provisioning tools

Any one of these trends would present a great challenge to software vendors to maintain a fair and acceptable pricing policy. But the fact that all four are happening at the same time is a recipe for software pricing mayhem, according to Gartner.

Software vendors will have to change their policies, but that change will not come quickly. It is therefore crucial for enterprises to understand the risks and protect themselves by starting contract negotiations with their vendors now, Gartner recommends.

Some vendors have already reacted positively to discussions of this nature. Microsoft, recently announced that it intends to only charge for each CPU irrespective of the number of cores. BEA has also stated it intends to charge a 25 percent additional fee for dual core, rather than 100 percent.

 
     
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