Oracle recently changed its pay-per-core strategy and now charges by a 0.75 multiple for each core, rounded up to the nearest whole number.

That means customers using an even number of processor cores would be charged the same as a customer using one additional core.

The exception is for Oracle Standard Edition and Standard Edition 1 on servers that use just one dual-core processor, where customers would be charged a single-processor license. Oracle’s VP of pricing and licensing Jacqueline Woods said this ensure its medium-sized customers get a price break.

The bottom line for Oracle is that when it comes to multi-core chips, software licensing and processor performance no longer have a one-to-one relationship, according to Woods.

There is incremental value to the dual-core processor in terms of performance, Woods said, on a conference call. Our research has determined that essentially the performance you get on the dual core processor at this time is 1.5 and 1.75 of a single core, so performance is aligned with value received by the customer, Woods said.

However, few other large vendors share Oracle’s rationale. Microsoft, Novell and Sun are among companies that charge per processor, no matter how many cores.

Oracle has made some improvement but we would like to see it charge on a per processor basis not on a per core basis, said Graham Lovell, Sun senior director of x64 servers, network systems.

Still, Oracle’s pricing gives it a competitive advantage over IBM’s own multi-core server platforms. On the P series and IBM/Unix platforms, for instance, IBM charges per core. Oracle now would be charging for 25% fewer cores, Woods said.

While IBM treats multi-core AMD- and Intel-based platforms as just a single core, IDC analyst Amy Konary said that most Oracle customers would run its database on a Unix platform. So [charging a premium for multi-core] may not put Oracle at a huge competitive disadvantage, Konary said.

Oracle’s Woods was quick to point out that the company was agnostic on hardware providers, not differentiating between IBM, Sun or anyone else.

Just how many Oracle customers use dual-core machines was not clear. Honestly, I don’t know how many people will be affected and I wouldn’t like to speculate, Woods said.

She also pointed out that additional pricing options, such as term licenses and pay-per-user policies, are still available to customers.

These types of non-hardware related pricing plans would likely become more popular in the future with the advent of server virtualization, Woods said. It may be easier, she said.

ICD’s Konary said a growing number of enterprises are interested in deploying virtualization server technology. Woods said she hears people talking about [virtualization] all the time.

Within six months or sooner, software vendors likely would begin to address just how they would charge for virtualized environments, Konary said.

Multi-core is here and here to stay, but I think the virtualization [pricing] issue is more vexing in that there aren’t too many answers for it, she said.

A boon of a virtualized server environment is that the amount of processing power varies with a customer’s demand. But this creates a tricky pricing situation for software vendors that charge by the processor. It also may make IT managers’ jobs more difficult.

It’s going to become more complex for customers to understand when they’re complaint and when they’re not and how their software licensing costs are going to change over time, said Sun’s Lovell.

SMEs may have most cause to worry, since they likely have less money and IT skills to throw at the problem than large enterprises.

Lovell agreed with Oracle’s Woods that non-hardware related pricing strategies might make most sense for virtualization. I think that’s where the industry is going to gravitate, he said.