David P. Smith

November 3, 2011 – Today Microsoft announced that the licensing model for SQL Server 2012 will be dramatically different from previous versions of SQL Server.

For the first time, Microsoft will start charging for “computing power” – yes, that means cores!  There are actually two models, one based on computing power and the other based on client access licenses (CALs), discussed below.

SQL Server 2012 Editions

With SQL Server 2012, Microsoft has released a new edition called “Business Intelligence”.  This version is CAL-based, and is intended to be used for local BI and not consumed by the public.  If you need the public (web) to connect to that SQL Server, you must upgrade to Enterprise edition, which is core-based.

The following table from Microsoft shows the versions of SQL Server 2012.  Each higher version incorporates all of the features of the previous version:

Other current editions of SQL Server will convert as follows:

• Datacenter – all datacenter features will now be incorporated into Enterprise Edition
• Workgroup and Standard for Small Business– Standard edition will be the most basic version of SQL Server
• Web Edition – this version will only be available to “hosters” via the Service Provider Licensing Agreement (SPLA)
• Developer, Express and Compact Edition will continue to be distributed without any pricing changes.  There will be a new version, LocalDB, that will have all of the programmability features of SQL Server 2012 Express edition, but be used like Compact Edition is today.

Calculating your cost for SQL Server 2012

The price per core will be based on a calculation of 1 core = ¼ the cost of a SQL 2008 R2 processor license (Microsoft Suggested Retail Price = $27,495).  Therefore each core license is $6873.75.

That may be a huge increase in cost for your environment.  As an example, I know of one customer that currently has dual processor, 12-core (per processor) boxes for their production environment.  With SQL Server 2008 R2, the total cost was $57,990 ($27,495 x 2 processors).  Now, with the pricing for SQL Server 2012, the cost for that same server will be $164,970 ($6873.75 x 24 cores).  Imagine the sticker shock for customers that have superdomes or other large servers!

These changes will take effect upon general availability (GA) of SQL Server 2012.  That is expected to be during the first half of 2012.

How to lower your upgrade costs

Having said that, there IS a way to lower your upgrade costs, but you must do it BEFORE June 30, 2012.  To ease the pain of the transition, and to support Software Assurance (SA), Enterprise Agreement (EA) and Enrollment for Application Platform (EAP), Microsoft has decided that all licenses purchased under SA before June 30, 2012 will upgrade to SQL Server 2012 with NO additional cost.  So, if you purchase a SQL Server 2008 R2 processor license with SA, that license will cover your upgrade to SQL Server 2012.

EA/EAP customers can continue purchasing licenses until the first renewal after June 30, 2012.  At the time of renewal, processor licenses will be exchanged for core-based licenses sufficient to cover the databases that are currently licensed with processor licenses.  There is a minimum of 4 cores per processor for Standard and Enterprise Edition and a minimum of 8 EE cores per processor for datacenter.

For customers that use Virtual Machines (VMs) for SQL Server, there are some interesting possibilities:

• You can buy core license only for the cores assigned to the VM
• For servers with a high VM density, you can license all of the cores on the physical machine and then deploy as many VMs as you want, with no additional cost.  This requires buying both EE and SA.  Without SA, you are limited to one VM per core with EE.
• License for VM mobility – this is a further benefit of SA.  With SA, you can move licenses from one server to another (on-premise or in the cloud) as often as you want.  Without SA, licenses can only be moved once every 90 days.

After June 30, 2012, the new pricing will take effect.  Upgrades without SA will be done with one processor license = 4 core licenses.  You will need to purchase additional core licenses for any remaining cores.

So, if you intend to upgrade, you should analyze your plans for the next three years and consider purchasing all of the licenses that you will need with SA or EA/EAP prior to June 30, 2012.  [Note that if you upgrade hardware after June 30, 2012, and that hardware has more cores, you will likely be responsible for the difference in core licenses.  While I don’t see that in any of the FAQs or other documentation, I was told on a call several weeks ago that would be the case.  This makes sense if Microsoft exchanges processor licenses for current hardware core licenses.]

Thoughts about the licensing model change

To be fair to Microsoft, computing power has increased dramatically in the last few years, but Microsoft’s pricing model has not.  In most cases, it has been more economical to purchase newer hardware with more cores than to purchase hardware with more processors and pay Microsoft the additional licensing cost.  With today’s computing power, we could simply continue to purchase new hardware and never pay for additional licensing.  That’s great for us, but the SQL Server team must be able to continue to show revenue and be able to both keep its current employees and hire new talent to produce the product on which our businesses rely.

Another different approach would be to keep charging per processor, but increase the per-processor cost significantly.  Initially that might sound good, but in reality, it means that someone with a 4-core processor would pay a much higher per-processor cost as someone with a 12-core processor.  The 12-core customer is probably much happier with that arrangement than the 4-core customer.  In the end, the per-core model is probably the fairest approach, but it is not one that any of us want or were expecting.  It would have been very helpful if Microsoft had released this information months ago, before we had submitted our 2012 IT budgets.

Microsoft does have charts that show that the total cost of ownership (TCO) is still much lower than both Oracle and DB2.  Microsoft feels that the TCO shows that SQL Server is the best alternative in the market for Enterprise-class RDBMs.

Summary

Still, it is a big change, and it may cause some companies to look to alternative scale-out technologies or open-source platforms, especially for entry-level or mid-level systems.  For the rest of us, it is time to submit an emergency change to our IT budgets so that we have the licenses that we need for the next few years.

For additional information, see the following links:

• SQL Server 2012 Licensing Overview page
• SQL Server 2012 Editions and Licensing FAQ
• SQL Server 2012 Licensing Datasheet