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This licensing issue is pretty convoluted. Oracle uses the following definitions (Oracle Linux Support and Oracle VM Support Global Price List):

System: is defined as the computer on which the Oracle Linux programs are installed. Where computers/blades are clustered, each computer/blade within the cluster shall be defined as a system.

Physical CPU: is defined as each monolithic integrated circuit responsible for executing a system’s programs. A monolithic integrated circuit with multiple cores or HyperThreading is counted as a single physical CPU when determining the total number of physical CPUs in a system.

Both Oracle Linux and Oracle VM  is licensed per physical CPU (server socket): 

A monolithic integrated circuit with multiple cores or HyperThreading is counted as a single physical CPU when determining the total number of physical CPUs in a system. See the Oracle VM Pricing Guide for further details.

In case of Oracle VM like in case of Oracle Linux we have two tier system with standard and premier tier:

In Oracle licensing terminology "limited" means the servers with no more then two sockets (Oracle Linux Support and Oracle VM Support Global Price List)

Oracle Linux Premier Limited and Oracle Linux Basic Limited support services are available only for systems with no more than 2 physical CPUs per system. Where computers are clustered, each system within the cluster must have no more than 2 physical CPUs.

For software running within VM environment support price is dependent on whether you are using hard partitioning or soft partitioning. Hard partitioning is equivalent to usage of blades, but with overhead imposed by VM. It is important to understand that Oracle permits to view and use Oracle VM as hard partitioning device (partitioning):

Oracle has deemed certain technologies, possibly modified by configuration constraints, as hard partitioning, and no other technology or configuration qualify. Approved hard partitioning technologies include: Dynamic System Domains (DSD) -- enabled by Dynamic Reconfiguration (DR), Solaris 10 Containers (capped Containers only), LPAR (adds DLPAR with AIX 5.2), Micro-Partitions (capped partitions only), vPar, nPar, Integrity Virtual Machine (capped partitions only), Secure Resource Partitions (capped partitions only), Static Hard Partitioning, Fujitsu’s PPAR. Oracle VM can also be used as hard partitioning technology only as described in the following document:

... ... ...

Partitioning Examples:

A server has 32 CPUs installed, but it is hard partitioned and only 16 CPUs are made available to run Oracle. The customer is required to license Oracle for only 16 CPUs.

A server comes with 30 CPUs and Oracle is installed and/or run on this server. If this server cannot be hard partitioned, the customer must obtain licenses for all 30 CPUs.

These examples are illustrative only. Specific configurations and hardware products vary by vendor. This is not and should not be considered a definitive or exhaustive list.

Note: Oracle does not offer special licensing terms for server usage models where the number of CPUs used can be scaled down or their usage varied – the "Pay Per Use" or "Pay Per Forecast" models.

So if you have, say 8 CPUs and you do not use hard partitioning, you need to license both VM and Oracle Linux and Oracle database for each CPU.  But after that you are permitted to run as many Oracle Linux instances as you please. After that you can run say 16 instances of Oracle Linux after getting a license to run it on four sockets, despite the fact that each socket has 8 cores and we are talking about 32 CPU machine. The same is true for databases.

Also please note different virtual server technologies different rules: as far as I understand Oracle's own hypervisor is the only software hypervisor classified as supporting hard partitioning, but VMware is not.  VMware and the rest are classified by Oracle as supporting soft partitioning only, implying higher license costs.

In any case it is better to limit number of physical CPUs (sockets) and use the highest clock speed possible as Oracle licenses prices overweight any additional costs of hardware.

If you are able to limit the number of physical CPUs (sockets) to two you can use standard licencies, despite the fact that you have multi-core CPUs (say 8 cores each). But if you use four CPUs you need to pay extra as you can't use standard edition of Oracle Linux. Here is and important sentence from the Oracle Price list:

"When licensing Oracle programs with Standard Edition One or Standard Edition in the product name, a processor is counted equivalent to an occupied socket; however, in the case of multi-chip modules, each chip in the multi-chip module is counted as one occupied socket.".

Standard Editions of Oracle Linux are good only for one or two processors, after that you need to buy Advanced Licence which costs several times more.

But here is a counterpoint: on Amazon VM they count virtual cores.

"For the purposes of licensing Oracle programs in the [Amazon Web Services – Amazon Elastic Compute Cloud (EC2)] Cloud environment, customers are required to count each virtual core as equivalent to a physical core. This policy applies to all programs available on a processor metric."

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[May 06, 2011] Oracle licensing under VMware and how to get the best bang for your buck

I've been meaning to write an article on how Oracle's licensing works with regards to VMware and how to minimize costs, but Oracle Storage Guy (Jeff Browning) said it better in this blog post ( ) than I could have said it. Go read his blog post in another tab and then continue on..

Back? Good.

So a real world example. My main vSphere cluster is a 16 blade Dell Cluster. 11 of those blades are Dell M600 blades each with I2 Intel Xeon E5430 processors (those are pre-Nahelm for those curious) and 5 of those blades are Dell M610 blades each with 2 Intel Xeon 5550 (Nahelm). In both cases, each blade has 2 sockets, with each core having 4 cores. With the Xeon 5550 processors, they also have 2 logical (hyperthreading) cores per physical core, giving me a total of 16 logical processors per M610 blade. Oracle licensing does not count logical cores, only physical ones.

Rather than paying to license 8 cores on 16 blades (which at list rates would work out to 8 * 16 * 0.5 * $47,500 ) for $3,040,000 or just over $3 MILLION DOLLARS in Oracle licensing, we have two clusters in vCenter. One of these contains 8 M600s and 3 M610s and basically contains everything in our cluster with the exception of our Oracle products licensed by processor. The other cluster is 2 M610 nodes and it holds all our Oracle databases and other Oracle products that are licensed by processor. That works out to (8 * 2 * 0.5 * $47,500) $380,000 or the same performance for about 1/10 of the price.

Now, you may be asking how those two blades are handling the load – I'm writing this blog entry during the middle of our production day. I'm running 20 Oracle database servers (one instance per VM server) combined on the two blades.

I didn't make a typo. I'm running 20 database servers essentially off of 2 CPUs worth of processing power (each Xeon 5550 is 2.67 MHz) and I've got 32 CPUs of processing power in the two node cluster (4 sockets, each with 4 physical cores, each physical core with 2 logical cores), so that's not going to be a bottleneck at any time soon.

On the RAM side, each M610 has 48G of RAM and right now I'm utilizing about 48G of RAM. Each M610 can handle up to 192G of RAM, but we went with 12 4G sticks due to that being the current cost sweet spot. Again, not a bottleneck.

So like Jeff said, utilization on Oracle database servers is typically low. If I wasn't virtualized at all, I'd have to have 20 physical servers and license all those processors for Oracle Enterprise Edition. If I allowed my Oracle VMs into my regular VMware cluster, I'd have all the advantages of VMware (HA (high availability), vMotion, Storage vMotion, etc) but I'd have to pay 10x the cost in Oracle licenses. Instead I've got a separate VMware cluster only licensing what I need and getting all the advantages of VMware.

For those curious about what we're doing with all those instances, some are development / support environments, but we're running our production Oracle E-Business Suite, Oracle Hyperion, Oracle Agile, and various other smaller load systems on two nodes supporting hundreds of end users.

What can I say? VMware rocks.

Oracle Storage Guy Oracle License Costs on the VMware vSphere Platform

The Technology Directors' Office Software Licensing Models Must Evolve to Match Innovation in Computing Resource Delivery

Software licensing has never been one my favorite topics. It has grabbed my attention lately however as a result of what I perceive as a gap between the evolution of infrastructure provisioning models and software vendor licensing models. As infrastructure virtualization and server consolidation continue to dominate as the main trends in computing delivery, software vendors seem bent on clinging to historical licensing models based on CPU. In today's dynamically allocated world of processing power designed to serve SaaS models for software delivery and flexible business user capabilities, software providers still insist that we as providers of computing services be able to calculate exactly how many "processors" we need to license or exactly how many unique or simultaneous users will access our systems. In addition, many software salespeople use inconsistent and confusing language that causes confusion among business people and even among some CIO's.

Is it a CPU, a Core or a Slot?

This is where I see the most confusion and inconsistency in language, even among software sales reps. Here is a little history of how things have gotten more complex. It used to be (in the bad old days) that one slot equaled one CPU which had one core. So, when software was licensed by the CPU it was simple to understand how many license you needed. You just counted the number of CPU's in the server that was going to run your software and there you had it. As chip makers continued to innovate, this model started getting slightly more complex. For example, when multi-core technology was introduced it became possible to have a CPU in a slot that actually constituted multiple cores or execution units. This innovation continues today and is evident in the latest six and even eight core Nehalem and Westmere architectures. So now the question had to be asked to software sales reps "what do you mean by CPU?"

Processing Power Gets Distributed

At nearly the same time that the chips inside our servers where getting more powerful and more complex, our server landscapes where getting more complex as well. Corporate enterprises began migrating away from centralized mainframe computing to client/server delivery models. New backend servers utilizing multi-core processors began to be clustered using technologies such as Microsoft Cluster Server in order to provide high availability to critical business applications. Now the question of "how many CPU's do you have?" became even more complex.

ERP Systems Drove Complexity in Server Landscapes

In the late 1990's, many businesses introduced Enterprise Resource Planning (ERP) systems designed to consolidate sprawling application landscapes consisting of many different application for functions such as finance, inventory and payroll. The initial server architecture for ERP systems generally consisted of a development system, a quality system and a production system, each running on distinct computing resources. Most business users only accessed the production system while users from IT could potentially access all three systems. At this point, software sales reps began speaking of licensing your "landscape" and many ERP providers offered named user licensing. A named user could access the ERP system running on development, quality or production regardless of the fact that these where distinct systems.

ERP Technical Architecture Options Drive Confusion

ERP systems still run on databases and require appropriate database licensing. ERP packages such as SAP offer technical design options allowing the database used for the ERP development, quality and production systems to be ran separately in a one for one configuration or in a clustered environment with one or two large severs providing the processing power for all the system databases. With the database licensing needed to run the ERP system there was still a breakeven point where licensing the database by "CPU" could come out cheaper than licensing the database by named user. And so as ERP implementations continued, software salespeople now spoke to technology and business managers about "licensing their landscape by named users with options for CPU based pricing based on cores". The fog was starting to set in. In fact these options became so confusing that when asked what the letters SAP stood for many business managers would reply "Shut up And Pay". The situation only got worse in the early 2000's when ERP providers like SAP saw the adoption rate of new core ERP systems begin to slow. At this point, the majority of enterprise organizations already had some sort of ERP system in place. ERP providers branched out into other supporting systems such as CRM, Supply Chain Management or Business Analytics. Now the "landscape" of applications became even more complex with named users crossing development, quality and production systems across multiple sets of business systems.

Virtualization - The Final Straw

In the 2007 timeframe, a major shift in the way computing power was allocated to business systems began to appear in enterprise data centers. Virtualization technology from companies such as VMware began to gain main stream adoption in enterprise class IT operations. Virtualization gave rise to terms such as Cloud Computing meaning that the processing power for any given business application was provided from a pooled set of computing resources, not tied specifically to any one server or set of servers. An individual virtual server now depended on virtual CPU's which themselves did not have any necessary direct relationship to a CPU or core in the computing "Cloud".

Despite this colossal shift in the provisioning of IT computing power, many software vendors clung to their licensing models, insisting on knowing how many "CPU's" you would use to run their software. Even today in 2010 when Virtualization has been well vetted and proven to be a viable computing delivery model at all tiers of an enterprises technical architecture, some software vendors either insist on sticking to outdated license models or simply issuing vague statements of support for virtualization. These vague statements of support often seem to be based more on resistance to change traditional licensing models rather than on any clearly stated technical facts.
After a long and storied evolution of computing power delivery from single core, single CPU machines to Cloud Computing, it seems like software providers ranging from database providers to providers of business analytics have been slow to innovate in terms of licensing models. Enterprise class providers of business software such as SAP or Oracle who claim to have embraced virtualization yet continue to either license certain product sets by CPU or issue only vague statements of virtualization support seem to be struggling to provide innovate pricing structures aligned with the new realities of computing power delivery.

I am sure they will get there, but for now I still get emails from software sales representatives quoting prices for products "by the CPU". Sigh…..

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