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Processor Value Unit Licensing for Middleware

Evolving the Structure to Provide a Foundation for the Future

Processor Value Unit Pricing and Licensing Education

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Pricing and Licensing Education Agenda

Per Processor Licensing BackgroundMiddleware Vendors Differentiate For Multi-coreTransition to Processor Value Unit LicensingPrices UnchangedAssign Processor Value Units to New ProcessorsNew Processor Value Unit Part Numbers and PricingSummary

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Historical Per Processor Middleware Licensing

One per processor license for each activated processor core in the server (full-capacity)

For sub-capacity - one license for each activated processor core in the partition

A significant number of SWG distributed products use per processor licensing

Products which use per processor licensing are deployed on various processor technologies across multiple hardware platforms

1 Core 1 Core

1 Core 1 Core

Server

4 Entitlements Required(Full Capacity)

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Now Middleware Vendors Differentiate by Processor Type…

. . . Adding complexity to middleware licensing

RISC Dual-coreSingle-core x86 Dual-core Sun Octi-core

* Microsoft per processor entitlements are derived from their per chip licensing.

Effective License Entitlements per Processor

Chip Type IBM Microsoft* Oracle BEA

Single-core (All Chips) 1.00 1.00 1.00 1.00

RISC Dual-core 1.00 N/A 0.75 0.50

x86 Dual-core 0.50 0.50 0.50 0.50

RISC Sun T1 Octi-core 0.38 N/A 0.25 0.25

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Customer Focus Should be on the Total Effective Price

License requirements are only part of the effective price

Price per Processor = License quantity x Product price per License

* Suggested Retail Price

Chip Type IBM Microsoft Oracle IBM Microsoft Oracle

($K) ($K) ($K)

Single-core (All Platforms) 1.00 1.00 1.00 $36 $31 $49

RISC Dual-core 1.00 N/A 0.75 $36 N/A $37

x86 Dual-core 0.50 0.50 0.50 $18 $16 $24

RISC Sun T1 Octi-core 0.38 N/A 0.25 $14 N/A $12

Data Server - Enterprise Edition

Effective Licensing Per Processor Effective Price Per Processor *

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Current Marketplace for Per Processor Licensing

More complex licensing structures Unique licensing requirements for differing

technologies

Fractional licensing to provide necessary granularity

Uncertainty of licensing for multi-core technologies

Multi-core technology has created a number of challenges for customers

The Current Structure is Not Sustainable

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In Today’s Environment, the Marketplace Needs

SimplicityObtain benefits of fractional licenses without calculating fractions

More flexibility through granularityEspecially for multi-core chips

Leverage sub-capacity licensing

Continued software price performance improvements

Clarity in the licensing structure

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Introducing Processor Value Unit Licensing

Middleware will be licensed in processor value unitsEach 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.

New StructureValue Unit

EntitlementsChip Type Per Processor

Single-core (All Platforms) 100

RISC Dual-core * 100

x86 Dual-core 50

RISC Sun T1 Octi-core ** 30

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Processor Value Unit Licensing has Simple Conversion

Current per Processor Entitlements x 100

= New Processor Value Unit Entitlements

New Structure"Old" Structure Value Unit

Entitlements Conversion EntitlementsChip Type Per Processor Factor Per Processor

Single-core (All Chips) 1.00 x 100 100

RISC Dual-core 1.00 x 100 100

x86 Dual-core 0.50 x 100 50

RISC Sun T1 Octi-core 0.30 x 100 30

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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

"Old" Structure New Structure

Per Processor MigratedEffective Effective Migration Value Unit

Entitlements Entitlements Conversion EntitlementsPer Chip Per Processor Factor Per Processor

Single-core (All Chips) 1.00 1.00 x 100 100

RISC Dual-core 2.00 1.00 x 100 100

x86 Dual-core 1.00 0.50 x 100 50

RISC Sun T1 Octi-core 3.00 0.30 x 100 30

* T1 entitlements per processor adjusted with the elimination of fractional licenses

*

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With No Price Changes for our Middleware for Existing Processors* Consistent conversion factor to create product prices

Both New Licenses and Maintenance Renewals

Current per Processor Price /100

= New Processor Value Unit Price

Customer price = # entitlements X price per entitlement . . . UNCHANGED!*

WebSphere Application Server Network Deployment on RISC Dual-core (2 cores)

Price per Entitlement

Number of Entitlements

Extended Price

Per Processor $15,000 2 $30,000

Conversion factor Divide by 100 Multiply by 100

Processor Value Unit $150 200 $30,000

* There may be slight changes due to rounding with the implementation of processor value units in some countries

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Increased Clarity as New Processors Will Be Assigned Processor Value Units

Deliver price performance improvement

Over time, new processors will be differentiated based on relative performance

Overall framework balances precision and simplicityNew Structure

Value UnitProcessor Entitlements

Chip Type Introduction Per Processor

Single-core (All Platforms) 100

RISC Dual-core 100

x86 (Intel / AMD) Dual-core 50

RISC Sun T1 Octi-core 30

Intel Itanium Dual-core 100

PowerPC 970 Dual-core 50

Power 5 QCM Dual-core 50

"'New" 2006

"Existing" Pre-2005

"'New" 2005

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Processor Value Unit Part Numbers and Pricing Implementation

Established Processor Value Unit Part Numbers Replacing 1300+ Per Processor Part NumbersEach Per Processor Part Number is replaced by a Processor Value Unit Part Number

License plus 12 months Maintenance, Maintenance Renewal, etc.

Price and Passport Advantage Point Rounding U.S. Dollars and Passport Advantage points were rounded to nearest two decimals Some prices may be impacted +/- 1% by currency or country roundingPassport Advantage point rounding should not impact customer band level

Created packs of 10 Processor Value Units as the minimum order quantity for programs where:Per Processor License Plus Maintenance Price was less than US$1,250.00 Maintenance was less than US$250Simplicity was needed for billing and administration

For example, US$100/100 = US$1.00 and when discounted would be below $1.00

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Old New No

Part License Price Per Part License Price Per Price

Part Number Type Number Requirement Processor Number Requirement Value Unit Change

Lic + Maint. 12 months D5ALTLL 1.00 p/core $15,000 D55WJLL 100 p/core $150.00 $15,000

Maint. Renewal E1ALVLL 1.00 p/core $3,000 E025SLL 100 p/core $30.00 $3,000

Maint. Reinstatement D5ALWLL 1.00 p/core $9,000 D55WKLL 100 p/core $90.00 $9,000

New Part Numbers, but No change to Part Number Structure

WAS ND Processor

Part number structure unchangedLicense + 12 months of Maintenance Maintenance RenewalMaintenance Reinstatement

Part Number Structure Unchanged

Note: Example above assumes processor value unit assignment = 100 (eg. single-core chip type)

WAS ND Value Units

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Summary

Historical Per Processor Middleware Licensing

Multi-core Technologies Challenging Licensing

Middleware Vendors Are Differentiating by Processor Type Fractional licensing to provide necessary granularity

IBM Is Announcing a Processor Value Unit Licensing Structure Customer price is unchanged

Replacement part numbers and prices

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Backup

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Reference Material

See the Processor Value Unit Licensing Announcement for Passport Advantage Middleware effective July 25, 2006 for more details. This, and other education material, will be available on the Passport Advantage web site *

Questions should be directed through the normal software support structure. If they are unable to answer a question, they will have access to the Processor Value Unit Licensing project office.

* http://w3-103.ibm.com/software/xl/portal/viewcontent?type=doc&srcID=XT&docID=W108544T29242L86