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Microsoft gets physical on processor prices

With the coming wave of dual-core and multi-core processors from Intel and AMD, Microsoft pledges to charge customers only on a per-physical-processor basis, throwing down a pricing challenge to the likes of IBM and Oracle.

Unlike some of its competitors, Microsoft said on Tuesday it will not change the way it licenses software when dual-core and multi-core server processors from the major chip vendors come onto the market next year.

Dual-core processors offer two processing cores on a single chip. This doubling of power has created some concern that software licensing fees will double too when the processors start coming to market. Both Intel Corp. and Advanced Micro Devices Inc. have said they plan dual-core processors to hit the market next year.

Because the dual-core

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processor means you can have two instructions on the same chip, some of the software companies have said that constitutes two instances, said Alvin Park, an analyst at Gartner Inc., in Stamford, Conn.

Microsoft has said it won't charge for extra licenses, but IBM and Oracle Corp. charge for individual processors, regardless of whether those processors sit on the same piece of silicon.

Though the dual-core processors aren't even here yet, Park said they will probably proliferate fast once they arrive. Microsoft's position will probably force competitors to rethink their licensing strategy, Park said.

"Competition being the way it is, with Microsoft and Oracle and Microsoft and IBM, I don't know if Oracle and IBM can continue to charge on a per-processor core basis if [Microsoft] is charging on a per physical processor basis," Park said.

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