Microsoft to change licensing rules

Microsoft is preparing an April Fools' Day announcement that's no joke. The company plans to change how it licenses the majority of its server software, which could significantly reduce a company's cost of running large, multiprocessor servers.

The new licensing plan affects eight Microsoft server products, but not its flagship Windows Server operating system software, according to the company.

The changes will apply to Microsoft's Application Center 2000, BizTalk Server 2002, Commerce Server 2002, Content Management Server 2002, Host Integration Server 2000, Internet Security and Acceleration Server 2000 and SQL Server 2000.

A key component of the change is how Microsoft counts server processors. Under the existing licensing scheme, a company running Microsoft's SQL Server 2000 database on a 16-processor system, for example, "would probably have to pay for all 16 processors, even if you only use four of them", said IDC analyst Al Gillen.

Beginning in April, however, Microsoft will charge for the number of processors used by the software.

That means companies running systems with more than one processor could see significant cost savings, depending on whether they "partition" servers into multiple segments.

Partitioning is a cost-saving measure for consolidating several lower-end machines onto a single larger machine. An application or server software is installed on one partition, while a different partition is used for other applications and server software. Such a plan is also good for responding to spikes in processing demands because a partition under a heavy load can quickly be assigned more computing resources than a comparatively idle one.

"Some Microsoft customers complained about having to license all CPUs on a multiprocessor server even though not all of them access the software," Gartner analyst Alvin Park wrote in a research note issued last week. Many customers consolidating several severs to, say, one with 32 processors balked at the current licensing scheme.

But Park warned that "the technical aspects of using logical and physical partitioning of servers to achieve licensing cost reductions are complex".

Microsoft plans to issue amended "use rights" for enterprises with volume licences for the eight products, Park said. But the company plans to issue no refunds or credits.

Rather, "customers can re-use freed-up licenses," Park said.

Gillen and Park agreed that the licensing changes could lead to significant cost savings for customers using large servers from Hewlett-Packard, Unisys and others with 16 or more processors. That means only a small percentage of Microsoft server customers would benefit, but analysts see those customers as key to Microsoft's intention of generating more enterprise-level business.

The changes could also help Microsoft to smooth any ruffled feathers among its customers because of an earlier, controversial licensing plan. That plan, called Licensing 6, effectively raised volume-licensing fees from 33 percent to 107 percent, according to market researcher Gartner. Many Microsoft customers did not initially sign up for the plan, and it remains a contentious issue.

"The people that have the horsepower to run two instances of SQL Server on a single system, they (have) a pretty high-end system," Gillen said. "Those are large, very important customers to Microsoft."

Joe Wilcox writes for News.com