Processor Value Unit Licensing for Middleware

1. Processor Value Unit Licensing for Middleware Evolving The Structure To Provide a Foundation For The Future Customer Presentation

2. Agenda • Historical perspective on the middleware software licensing environment • Current middleware software licensing approaches • New IBM licensing approach • With no price changes • Benefits of the new structure

3. Middleware Is Licensed In Primarily Two Ways In general, two licensing models predominate today: Proc Proc Proc Proc Per User One license per user 20 users = 20 licenses Per Processor Historically, one license per processor 4 processor cores = 4 licenses

4. Current Marketplace for Per Processor Licensing Multi-core technology has created a number of challenges for customers • More complex licensing structures • Unique licensing requirements for differing technologies • Fractional licensing to provide necessary granularity • Uncertainty of licensing for multi-core technologies

5. Processor Definition is Important in Middleware Licensing • The core is a functional unit on which software executes • Multi-core chips have more than one processor core on the chip Dual-core Chip Single-core Chip 1 2 1 IBM defines processor = core As do most Middleware Vendors…eg. Oracle and BEA However, some Hardware Vendors . . . Intel, AMD, and Sun define processor = chip

6. 1 Core 1 Core 1 Core 1 Core 1 Core 1 Core 1 Core 1 Core 1 Core Same Workload Processor Cores Are Not All Created Equal Today • The number of processor cores required for a given workload varies by processor technology

7. One Processor Core Improve Core Strategy Core Disparity Core Performance Multi-core Strategy Time Core Disparity Will Increase In Future • The performance gap is growing between processor core technologies as a result of diverging strategies • Core performance improvement • Flat core performance, but increase cores per chip

8. Server • 2 Chips • 4 Cores Appl Appl DB2 Appl 1 DB2 License Required Customers Want More Licensing Granularity • Leverage the performance of the processor core • Increasing interest in virtualization • Enables consolidation and the adoption of new hardware technologies • Sub-capacity licensing

9. x86 Dual-core RISC Dual-core Single-core Sun Octi-core Middleware Vendors Differentiate by Processor Type . . . . . . Adding complexity to middleware licensing * Microsoft per processor entitlements are derived from their per chip licensing.

10. License requirements are only part of the effective price Price per Processor = License quantity x Product price per License Customer Focus Should be on the Total Effective Price * Suggested Retail Price of License & Maintenance for 12 months

11. In Today’s Environment, the Marketplace Needs • Simplicity • Obtain benefits of fractional licenses without calculating fractions • More flexibility through granularity • Especially for multi-core chips • Leverage sub-capacity licensing • Continued software price performance improvements • Clarity in the licensing structure

12. Introducing Processor Value Unit Licensing • Middleware will be licensed in processor value units • Each processor core assigned a specific number of processor value units • Acquire the appropriate number of value units for each processor core • Each middleware program has a unique price per value unit • Processor value units are transferable among systems by product within the enterprise * Power PC 970 and Power 5 QCM dual-core chips require 50 Value Units ** T1 entitlements per processor adjusted with the elimination of fractional licenses.

13. Current per Processor Entitlements x 100 = New Processor Value Unit Entitlements Processor Value Unit Licensing has Simple Conversion

14. Additionally, Simple Migration of Existing Entitlements • Existing Maintenance Processor Entitlements converted to Processor Value Unit Entitlements • Current Per Processor Entitlements x 100 = Processor Value Units • Same conversion factor for all processor types *

15. Current per Processor Price /100 = New Processor Value Unit Price With No Price Changes for our Middleware for Existing Processors* • Consistent conversion factor to create product prices • Both New Licenses and Maintenance Renewals • Customer price = # entitlements X price per entitlement . . . UNCHANGED!* * There may be slight changes due to rounding with the implementation of processor value units in some countries

16. Processor Value Units Provide Flexibility Through Granularity • Value Unit Licensing at the processor core level • Capability to enable sub-capacity licensing • Granularity to address changing technology • Flexibility to create new processor value unit levels • Deliver software price performance improvements Software price performance improvements will range over time depending upon a number of factors including market conditions Price Performance • Processor core performance levels will vary between chip vendors • Processor Value Units relative to core performance Processor Core Performance # of Processor Value Units Time

17. Increased Clarity as New Processors Will Be Assigned Processor Value Units • Deliver software price performance improvement • Over time, new processors will be differentiated based on relative performance, among other factors • Overall framework balances precision and simplicity • Will publish all Processor Value Unit requirements

18. New Tools to Determine Processor Value Unit License Quantities • Processor “Value Unit Calculator” Helps Determine License Quantities • Passport Advantage Online contains a link to the processor “Value Unit Calculator” • Available to all customers with a Passport Advantage contract • Calculates number of processor value units required for every hardware environment • Used to calculate price (number of value units X price per value unit)

19. Benefits Of The Processor Value Unit Structure • Creates simple licensing structure • Avoids fractional licensing for multi-core chips • Provides flexibility and granularity • Enables sub-capacity licensing at processor core • Positions for future • Continue to deliver software price performance improvements • Licenses are transferable across distributed systems • Provides clarity to middleware licensing • Over time, new processors will be differentiated based on relative performance • No price changes for middleware on existing processors

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