New computer chip could cause software price problems ( Yahoo - USA TODAY )

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New computer chip could cause software price problems

Mon Apr 25, 6:28 AM ET   Business - USATODAY.com

By Michelle Kessler, USA TODAY

A promising new kind of computer chip can have an unexpected side effect: forcing companies to pay more for software.

Chipmakers Intel and Advanced Micro Devices each launched computer processors last week that have two "brains" - called "cores" in industry lingo - on one chip.

The chips run faster than similar traditional processors, which only have one brain. But they're not twice as fast. And that's a problem for business software buyers.

Software makers such as Oracle and IBM frequently price software on a per-core basis because, until now, one core was roughly equal to one computer's worth of power.

For example, a business running a piece of software on five cores is assumed to use the software more than a company running it on one core. Thus, the five-core business would pay more.

The new chips by Intel and AMD don't fit this equation. That may cause some companies - especially small and midsize firms not big enough to get special deals - to pay almost twice as much for some software, tech analysts say. Or it may cause slow adoption of promising multicore chips, they say.

"It's a very real concern," says software analyst Amy Konary with researcher IDC.

Software makers are dealing with the problem differently:

Database giant Oracle says it will continue to charge by the core. But Oracle also offers per-user or per-employee payment plans. Oracle once charged by the megahertz, or clock speed, of a computer. But it ran into trouble when other factors started changing computer speed. In response, Oracle tried to create pricing plans that weren't affected by changes in hardware technology, Vice President Jacqueline Woods says.

IBM usually charges by the core, but it says it will count the new Intel and AMD chips as a single core - at least for now.

Microsoft will count Intel and AMD chips as a single core, because they're part of the same processor.

The confusion is expected to get worse as dual-core chips gradually replace single-core ones.

Intel and AMD traditionally focused on single-core chips, which they kept making faster. But engineers are hitting physical limits that make more increases tough. So to keep making chips faster, they added a second brain. It's not twice as fast because these brains share other computer resources.

But without counting cores, it's hard to price behind-the-scenes business software.

A company with 100 employees typically would buy 100 copies of Microsoft Office. But a behind-the-scenes program, such as a database, usually isn't used directly by employees. It's accessed by other programs on other computers that pass data on to workers. That makes it tough to figure out how much a database is used.

And it will soon get tougher. Computers are being linked in grids where processing power is constantly divvied up.

"It makes it very, very difficult to figure out how many processors are being used at any given time," Konary says.

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