Is SQL Server 2012 Pricing Itself Out of the SMB Market?

SQL Server 2012’s new core licensing model is one small change that could potentially have a big effect on the adoption of SQL Server 2012. In many ways, the move to core licensing makes a lot of sense because it’s essentially following today’s multi-core processor trend. However, like any change that alters the price of a mission-critical product, this new licensing model can have a big effect on when, or even if, organizations choose to make the move to a new release. In general, although no organization likes to pay more for a new release, large companies and enterprises are typically less affected by price increases than smaller companies, where software increases represent a bigger part of their budget. Regardless, core licensing is nothing new in the database world. In fact, when SQL Server 2012 went down this path, it was only following in the footsteps of Oracle, who had already adopted a core licensing model. (See also, "SQL Server 2012 Editions").

Although the talk about core licensing has garnered a lot of attention with SQL Server 2012, it’s important to note that core licensing is only required with the high-end SQL Server 2012 Enterprise edition, which is priced at $6,874 per core. The new Business Intelligence edition doesn't use core licensing. The Business Intelligence edition is priced at $8,592 per server, plus $209 per CAL per user. Accordingly, with the Enterprise edition you pay according to the power that you need, whereas with the Business Intelligence edition you pay according to the system’s users. The Standard edition offers you a choice of core licensing at $1,793 per core, or $898 per server, plus $209 per CAL per user. These are all list prices. Most customers actually pay less thanks to their enterprise purchasing agreements. There are also a couple of important nuances to Microsoft’s new core licensing. First, you must buy a minimum of four core licenses. Second, if you need to purchase more licenses, you must buy two-core packs.

What’s the bottom line? Overall, Microsoft’s changes in licensing are designed to be in line with previous versions of SQL Server, but SQL Server 2012 Enterprise now encompasses the functionality of both the older Enterprise and Datacenter editions – its pricing also spans both editions. Organizations running SQL Server 2008 R2 Datacenter will find that in most cases the new SQL Server 2012 Enterprise costs less until you get above four processor quad core systems. Organizations that are running SQL Server 2008 R2 Enterprise with more than four cores per processor can expect to pay more for the SQL Server 2012 Enterprise. Directions on Microsoft, in March 2012, included an interesting comparison showing that a two-processor eight-core system (dual quad-cores), which is a common low-to-medium configuration, had costs equivalent with the old SQL Server 2008 R2 Datacenter (formerly the high end of the SQL Server line-up), but roughly twice that of the older SQL Server 2008 R2 Enterprise. SQL Server 2012 Standard winds up being a bit more expensive than SQL Server 2008 R2 Standard for that same dual quad-core configuration, but the other configurations are roughly the same. To me this means it’s the larger organizations that were running high-end SQL Server 2008 R2 Enterprise systems will take the biggest price hit. Of course, different programs such as Microsoft’s Enrollment for Application Platform (EAP) can help mitigate the price increase. Small-to-midsized businesses (SMBs) and departmental installations likely won't be significantly affected.

On a side note, there are a couple of hidden pricing implications with SQL Server licensing that not everyone realizes. First, for virtual machines (VMs), when you license by core, you're essentially licensing the vCPUs in the VM. However, if you have SQL Server 2012 Enterprise and you license all the cores in the physical system, you can have an unlimited number of VMs. In addition, although there are no technical limitations to moving SQL Server VMs between servers, there's a licensing restriction that only allows you to move SQL Server VMs between hosts every 90 days. The 90-day licensing restriction certainly stands in the way of building the dynamic data center and the private cloud. If you want unrestricted movement of SQL Server VMs, you must have SQL Server 2012 Enterprise and Software Assurance (SA). If you have any aspirations of using SQL Server and the private cloud, it’s clear that Microsoft is requiring that you get the Enterprise edition and SA.

Although there can be cases in which the new release is more expensive, there are also cases in which it’s about the same and others where it’s less. SMBs running the Standard edition will come out about the same. Larger customers that had the Enterprise edition likely will be affected the most. Microsoft provides more information on SQL Server licensing and a datasheet on licensing.