IBM Software Processor Value Unit Licensing for Middleware

® IBM Software Processor Value Unit Licensing for Middleware Evolving The Structure To Provide a Foundation For The Future Processor Value Unit Customer Experience Education IBM Internal Use Only--Not to be shared outside the company until July 25, 2006 © IBM Corporation

IBM Software Agenda § Review of Processor Value Unit Licensing § Part number transition § Passport Advantage Online 4 Viewing entitlements 4 Value Unit Calculator § Maintenance Renewals Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 2

IBM Software Introducing Processor Value Unit Licensing § Middleware will be licensed in processor value units 4 Each processor core assigned a specific number of processor value units § Acquire the appropriate number of value units for each processor core § Each middleware program has a unique price per value unit § Processor value units are transferable among systems by product within the enterprise * Power PC 970 and Power 5 QCM dual-core chips require 50 Value Units ** T 1 entitlements per processor adjusted with the elimination of fractional licenses. Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 3

IBM Software Processor Value Unit Licensing has Simple Conversion Current per Processor Entitlements x 100 = New Processor Value Unit Entitlements * ** * Power PC 970 and Power 5 QCM dual-core chips require 50 Value Units ** T 1 entitlements per processor adjusted with the elimination of fractional licenses. Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 4

IBM Software With No Price Changes for our Middleware for Existing Processors* § Consistent conversion factor to create product prices 4 Both New Licenses and Maintenance Renewals Current per Processor Price /100 = New Processor Value Unit Price § Customer price = # entitlements X price per entitlement. . . UNCHANGED!* Web. Sphere Application Server Network Deployment on RISC Dual-core (2 cores) Per Processor Conversion factor Processor Value Unit Price per Entitlement Number of Entitlements Extended Price $15, 000 2 $30, 000 Divide by 100 Multiply by 100 $150 200 $30, 000 * There may be slight changes due to rounding with the implementation of processor value units in some countries Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 5

IBM Software Benefits Of The Processor Value Unit Structure § Creates simple licensing structure 4 Avoids fractional licensing for multi-core chips § Provides flexibility and granularity 4 Enables sub-capacity licensing 4 Positions for future § Continue to deliver software price performance improvements § Provides clarity to middleware licensing 4 Over time, new processors will be differentiated based on relative performance 4 No price changes for middleware on existing processors Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 6

IBM Software New Orders will be in Processor Value Units § IBM will replace all per processor part numbers with per value unit part numbers 4 All new orders will be in processor value units § New proofs of entitlement will be in processor value units § Maintenance renewals will be in processor value units § Existing proofs of entitlement will remain per processor 4 All per processor maintenance entitlements will be converted to processor value unit entitlements on July 25, 2006 4 Old part numbers are valid until November 10, 2006 § Quotes generated prior to 7/25/06 will still be valid § New quotes will be in processor value units Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 7

IBM Software Quotes Issued Before July 25 th § During the transition period, per processor part numbers still process through Nov. 10, 2006 § Quotes with per processor parts converted to an order prior to Nov. 10 will process 4 Order History will reflect per processor part number 4 Proofs of Entitlement will reflect processor value units § Outstanding Quotes or Open Line Items after Nov. 10 4 Will need to be updated to processor value unit part numbers § Recommendation 4 Close all outstanding quotes by October 31 st 4 Issue all new quotes in processor value units Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 8

IBM Software Processor Value Unit Part Numbers and Pricing Implementation 4 Established processor value unit part numbers 4 Replacing 1300+ per processor part numbers 4 Each per processor part number is replaced by a processor value unit part number 4 License plus 12 months maintenance, maintenance renewal, etc. 4 Price and Passport Advantage Point Rounding 4 U. S. Dollars and Passport Advantage points were rounded to nearest two decimals 4 Some prices may be impacted +/- 1% by currency or country rounding 4 Passport Advantage point rounding should not impact customer band level 4 Created packs of 10 processor value units as the minimum order quantity for programs where: 4 Per processor license plus maintenance price was less than US$1, 250. 00 4 Maintenance was less than US$250 4 Simplicity was needed for billing and administration 4 For example, US$100/100 = US$1. 00 and when discounted would be below $1. 00 Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 9

IBM Software 10 Processor Value Unit Minimum Order Quantity Example Per Processor Structure Part Number Description Processor Value Unit Part Number Description 4 Implementation of 10 processor value unit part number Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 10

IBM Software New Part Numbers, but No change to Part Number Structure 4 Part number structure unchanged 4 License + 12 months of Maintenance 4 Maintenance Renewal 4 Maintenance Reinstatement Part Number Structure Unchanged WAS ND Processor WAS ND Value Units Note: Example above assumes processor value unit assignment = 100 (eg. single-core chip type) Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 11

IBM Software Passport Advantage Online • Customer secure web tool • Access point for: • Value Unit Calculator • Entitlement Records • Maintenance Renewal notifications • Other features not associated with processor value units • Web address Ibm. com/software/passportadvantage - Choose Passport Advantage Online - Choose For customers Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 12

IBM Software PA Online – Value Unit Calculator Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 13

IBM Software Processor “Value Unit Calculator” Guided Mode selected Question: On which processor architecture are you deploying your software? Choices: x 86, RISC, IA-64 (Itanium), Other Action: Choose x 86 Question: On which server vendor are you deploying your software? Choices: IBM, Dell, Fujitsu, HP, Sun, Other Action: Choose IBM Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 14

IBM Software Processor “Value Unit Calculator” Expert Mode Selected After picking Expert mode, Pick one Selection Path 1 2 § Expert Mode Selected: Provides 3 optional selection paths to choose from to identify processors 3 beginning. 1. Processor Architecture 2. Server Vendor 3. Processor Vendor Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 15

IBM Software PA Online – Reporting of Entitlements Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 16

IBM Software PA Online – Reporting of Entitlements Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 17

IBM Software PA Online – Reporting of Entitlements Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 18

IBM Software PA Online – Reporting of Entitlements The part number description will change to value units * The quantity field will be multiplied by 100 and will be reflected in processor value units * For products using the per processor metric only Internal Use Only--Not to be shared outside the company until July 25, 2006 IBM Confidential 19