1. ® IBM Software © 2006 IBM Corporation Processor Value Unit Licensing for Middleware Evolving The Structure To Provide a Foundation For The Future Customer Presentation

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

4. IBM Software 4 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

5. IBM Software 5 Single-core Chip Processor Core Chip Socket 1 Dual-core Chip Processor Core Chip Socket 12  The core is a functional unit on which software executes  Multi-core chips have more than one processor core on the chip Processor Definition is Important in Middleware Licensing 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. IBM Software 6 Processor Cores Are Not All Created Equal Today 1 Core Same Workload 1 Core  The number of processor cores required for a given workload varies by processor technology

7. IBM Software 7 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 Core Performance Time One Processor Core Improve Core Strategy Multi-core Strategy Core Disparity

8. IBM Software 8 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 Server 1 DB2 License Required  2 Chips  4 Cores Appl DB2 Appl

9. IBM Software 9 Middleware Vendors Differentiate by Processor Type...... Adding complexity to middleware licensing RISC Dual-core Single-core x86 Dual-core Sun Octi-core * Microsoft per processor entitlements are derived from their per chip licensing. Effective License Entitlements per Processor Chip TypeIBMMicrosoft*OracleBEA Single-core (All Chips)1.00 RISC Dual-core1.00N/A0.750.50 x86 Dual-core0.50 RISC Sun T1 Octi-core0.38N/A0.25

10. IBM Software 10 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 of License & Maintenance for 12 months

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

14. IBM Software 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. IBM Software 15 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$15,0002$30,000 Conversion factorDivide by 100Multiply by 100 Processor Value Unit$150200$30,000 * There may be slight changes due to rounding with the implementation of processor value units in some countries

16. IBM Software 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 Time Software price performance improvements will range over time depending upon a number of factors including market conditions Processor core performance levels will vary between chip vendors  Processor Value Units relative to core performance Processor Core Performance Price Performance # of Processor Value Units

17. IBM Software 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. IBM Software 18  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 New Tools to Determine Processor Value Unit License Quantities  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. IBM Software 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

20. IBM Software 20 Your name Your title Processor Value Unit Licensing for Middleware