Oracle lowers price for some multicore chips

The database heavyweight updated its licensing terms on Monday to reflect the changes. The shift was made because of the emergence of high-volume servers with multicore processors, according to Oracle.

"As technology evolves, we have adapted our licensing models to accommodate these changes," Oracle's vice president of pricing and licensing, Jacqueline Woods, said in a statement.

Multicore processors pack two or more "cores," or processing units, onto a single piece of silicon. Intel, AMD and Sun have each released dual and multicore chips this year.

Databases are often priced based on the number of processors on a server. Until July, Oracle designated each core as a single processor. In July, it changed its policy so that each core would be treated as three fourths of a processor when calculating database costs.

On Monday, the company scaled back the pricing again. Its new policy states that each core on an AMD or Intel chip will be considered half of a processor. Each core on a Sun UltraSparc T1 processor, which is used in the company's recently released servers, is considered a quarter of a processor.

The reduced prices at Oracle follow similar moves made by its primary database competitors, IBM and Microsoft.

In April, IBM shifted its policy and now treats dual-core chips from AMD and Intel as a single processor. But it continues to treat each core as a processor for IBM's own Power chips.

Microsoft does not charge a premium for software that runs on multicore servers.

In a research note sent on Monday, WR Hambrecht analyst Robert Stimson said Oracle's second database price cuts are in response to growing price competition in the database market.

"We believe that this latest round of price cuts may be indicative of pricing pressure Oracle is experiencing from low-cost database alternatives such as Microsoft's newly released SQL Server 2005 and open-source offerings," Stimson said.

Reuters contributed to this report.