Oracle's recent revelation that it will find it "too complicated" to develop a licensing model that accounts for software running on virtual servers has prompted a mixed response from experts, with some insisting the stance is short-sighted and others arguing the vendor is right to refrain from complicating its licensing model further.

Neil Macehiter of analysts Macehiter Ward-Dutton said that Oracle was trying to "delay the inevitable" in the face of growing customer pressure for virtual machine-based pricing models. "While firms use virtualisation to just deliver server consolidation it is not as big an issue," he said. "But as soon as they start using virtualisation in more sophisticated ways they will realise the current licensing models are broken."

Roy Illsley of analysts Butler Group agreed Oracle and other vendors would have to develop licensing models for virtualised environments. "It is difficult [to develop virtualisation pricing], but vendors are not putting enough effort into it," he said. "Eventually, if they don’t come up with something they will lose out." However, he added that Oracle's current stance was understandable on the grounds that virtualisation of database apps was less advanced than in other areas.

Ronan Miles, chairman of the Oracle UK User Group, also agreed all vendors will have to address the licensing challenge posed by increased adoption of virtual machines, but argued it was too early for Oracle to adapt its licensing model.

"Licensing for virtual machines will be complicated and Oracle has been criticised enough in the past for bringing in complex licensing terms," he said. "I'd say they are right to wait and see how the market develops because customers aren’t knocking their door down about it yet."

He added that in the meantime early adopters of virtualisation software had the option of agreeing usage with Oracle and insisted that issues around licensing were unlikely to hamper virtualisation software deployments.

Speaking earlier this month, Oracle president Charles Phillips insisted it was "too complicated" to develop a licensing model based on virtual rather than physical machines and downplayed suggestions the existing enterprise software licensing model was broken, insisting critics were guilty of taking a "huge leaps of logic from small changes [in the market]".

Mukesh Sharma, senior manager for technology alliances in Europe at virtualisation software specialist VMware, said that Oracle's concerns were understandable. "Oracle has a complex and diverse portfolio so it will be difficult to create a one-size-fits-all approach," he observed. However, he hinted there was a risk that software vendors that failed to account for virtualised environments through their licensing could find their competitiveness compromised.

"We are seeing two schools of thought," he said. "One set of ISVs are only just beginning to think about licensing for virtualisation, but another set are already being very creative and are developing pricing models that work on a per virtual machine basis."

VMware cited middleware software specialist BEA as a vendor already selling some of its products on a per VM basis.

Macehiter added that ISVs developing licensing models for virtual machines would have to rely heavily on enhanced monitoring tools capable of tracking software deployments across virtual machines. "The big challenge is policing," he explained. "It is easier to license software on a physical box than on a dynamic virtual machine. Customers are going to expect automated tools for policing their usage across the virtualised environment and letting them know if they are compliant."