Cut software licensing costs with fewer, faster cores

As software vendors adapt licensing terms to a per-core model, administrators should reassess how they purchase hardware in order to save money.

Virtualization has always offered a compelling financial incentive -- not just as a tool to consolidate physical servers, but to reduce software licensing costs. However, in recent years, software vendors have adjusted licensing terms to account for virtualization and the proliferation of multicore CPUs. Instead of licensing software based on the number of physical CPUs, many now structure costs based on cores. This doesn't mean users are going to move away from virtualization or multicore CPUs, but it might change how we shop. With upcoming licensing changes, now might be the time to rethink how you purchase hardware for virtualization.

Reducing cores lowers software licensing costs

In today's world, we often trade core speed for a higher number of cores to better support virtualization. As licensing models increasingly focus on the quantity of cores, we have the opportunity to take advantage of higher clock speeds in modern CPUs. In some cases, it now makes more sense to reduce the number of physical cores in your servers and purchase faster processors to help cut your software licensing costs. It's important to realize that a bump in processor speed will not equally offset the performance loss that results from cutting cores. In general, you'll likely sacrifice some performance for reducing the number of cores, even if you buy faster processors. However, the software license cost savings that come from a reduction of physical cores may be hard to ignore.

For many, the reduction in cores is new territory. This decision has to be based on an evaluation of your processor needs by examining CPU ready times and overall usage. With good monitoring tools and a little math, an administrator can easily get this information and figure out which model works best for them. That said, the overall sweet spot may simply be eight physical cores per CPU. This isn't a technical limit, it's a Microsoft limit.

Microsoft's new licensing scheme

Windows Server Datacenter edition has been an ideal choice for customers looking to license servers on top of a virtualized platform. Microsoft's new licensing scheme requires that organizations purchase additional core licensing packs for CPUs with more than eight cores. Paying for one or two core packs isn't a problem, but if you start looking at the top-end CPUs from Intel and AMD that have up to 18 physical cores, you could easily end up doubling your Windows Server licensing.

Given Microsoft's dominance in the server operating system market, this licensing change could persuade Intel and AMD to adjust product roadmaps as customers struggle to keep software licensing costs in check. One advantage Intel has in this space is its use of hyper-threading technology, which allows a single core to function as two separate processors, and does not require additional licensing on Windows Server -- at least, it doesn't yet.

Unfortunately, Microsoft's approach could potentially open the flood gates as more application vendors turn to this method to enhance revenue. According to Microsoft, this licensing adjustment was meant to create an easier path to move workloads from on-premises servers to Azure. While this might be true, for most people it's just an additional cost.

Although this new licensing trend isn't directly Intel or VMware's fault, their technology has allowed administrators the flexibility to allocate compute resources. For example, a software licensing model that allocates four CPUs to a VM can be a lot more expensive than one CPU with four cores. This isn't exactly a loophole, but many have used this to their advantage in licensing and now it looks like we will have to pay the piper -- at least to a degree.

A new path for CPU manufacturers

For many years now, the real growth in CPUs has been in the quantity of cores. Will a licensing change convince chip makers to now focus on building CPUs with faster clock speeds and fewer cores? If administrators find that the new licensing schemes increase costs too much, CPU manufacturers may be forced down this path. Open source and Linux offer alternatives to the high cost of software licensing. Although these products have the ability to be as widely used as Windows, they aren't, in large part due to support and compatibility. The reality is that much of the world runs on Windows and moving to other platforms can lead to other expenses related to training, application compatibility and lost productivity.

Rather than making the knee-jerk reaction to switch out products or vendors, get to know your environment better. Knowing your environment will be the true key to saving money in the wake of major licensing changes. Gone are the happy days of extra-large hosts and simply throwing virtual hardware at VMs. When it comes to workloads, the new age of licensing will require far more detail than ever before, and users should carefully tune their VMs in order to avoid additional software licensing costs.

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