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IDC: Multi-core Processing to Jolt Industry

The idea of multi-core processing has already caused several vendors to change their pricing models in 2005, but some researchers say that trend is only the beginning.

IDC analysts said in a new report that the practice of putting two or more processors on a single chip will lead to new revenue opportunities for vendors who can sell the concept without rubbing customers the wrong way.

Multi-core processing has distinct advantages over its single-core ancestors. Putting more processors, or cores, on one chip yields certain performance benefits (though not double the power of one chip, as some might assume) without consuming the power associated with two distinct processors.

Matt Eastwood, vice president of IDC's server research, said in his report that the emergence of multi-core "may be one of the most significant industry developments of the past 40 years." He believes the impact on the IT infrastructure will accelerate with each generation of multi-core processing technology, causing a big market shift by 2009.

The analyst said IT companies, from chipmakers to providers of operating platforms, security, application development and services delivery must embrace multi-core to meet the challenges presented by emerging competitors.

"Users expect significant price/performance improvements from these systems and anticipate that multi-core will further accelerate the adoption of server virtualization technologies," Eastwood said. "Technology suppliers that prepare for this transition will be rewarded with increased revenue opportunities over the next few years."

Computing experts expect multi-core processing to drive significant cost savings and performance improvements for customers using modular blade systems and virtualization software, for which pricing has always been tricky.

Detractors have said a combination of dual-core pricing and virtualization could be a tricky proposition in terms of accurate licensing rates. Virtualization allows part of a processor to be dedicated to one task, which can cloud the pricing issue.

The question is: If each chip boasts two sockets, how would this affect the way vendors charge customers? This is the same question that plagues the prospect of utility computing scenarios, which allows users to pay according to the computing power they use. This approach gives users greater control over how they spend money on resources such as CPUs.

The idea of more favorable price/performance ratios has appealed to some customers.

But it has also led to chafed feelings between customers and companies who wanted to charge per core instead of per chip. Software vendors who charged customers for their software per CPU were charging double for using dual-core chips from Intel or AMD.

Customer outcry is forcing many vendors to reconsider their licensing schemes.

In perhaps the most high-profile example, Oracle in July announced a price/performance decrease of 25 percent from its previous licensing model of charging customers for each core being used.

Specifically, Oracle decided to price its database and application server software by designating each socket on a multi-core processor as three-quarters of a chip.

The company arrived at that figure after finding that a dual-core processor typically performs 1.5 to 1.7 times a single-core chip. Oracle opted for the pricing factor to accurately reflect the value of performance value the customer would receive.

Other software makers are changing their tune. Earlier this week, BEA Systems said it will charge customers with servers employing dual-core chips as though they are using single processor systems. However, BEA will still charge a 25 percent premium for systems using processors with more than two cores.

Some analysts wondered whether these type of half-hearted discounts would win over or alienate customers, given that rivals like Microsoft license software for multi-core processors by counting each chip as one.

IBM is half in and half out at this point. Big Blue treats multi-core chips from Intel and AMD as one processor, but it still treats each core in its multi-core Power line as a separate processor.

IDC's Eastwood expects 2005 to be a watershed year when it is all said in done. But it is clear some kinks have to be worked out.