What Oracle’s JAVA SE Licensing Change Could Mean to You

What Oracle’s JAVA SE Licensing Change Could Mean to You

Is the JAVA SE licensing change as simple as it sounds?

When software vendors claim to be simplifying software licensing terms, experienced enterprise customers know to dig into the details to find how it may impact their costs. So, when Oracle in January revealed “a simple, low-cost monthly subscription” model for licensing its Java SE software, you should be aware that it includes potentially huge pricing implications and complexity for your own situation.

The Java SE Universal subscription, according to Oracle, “combines license and support into a simple subscription that allows you to cost effectively manage Java SE installations, updates and upgrades across your enterprise.”

But the details of the Oracle Java SE Universal Subscription Global Price List disclose changes in pricing that will have a material impact on Oracle customers (and even non-customers) and it is important that organizations assess how these changes will affect them.

Leading analysts and industry publications paint a picture that few customers are likely to relish

“This change will result in a considerable increase in costs for many organizations,” reports ITAM Review, which says it has “heard real-world estimates of between 2x – 10x cost increases.” And, the publication adds, “there is no hiding from this charge. Oracle simply needs to detect a download of a fee-payable version by your organization and to have knowledge of your employee count to invoice you. No audit, no discovery, no negotiation required.”

IDC also paints a picture that will seem very unattractive to those who are most impacted. “Effectively, the new terms require customers to now purchase sufficient subscriptions in line with the Total Number of Customer Employees, regardless of whether they utilize/leverage the software directly, indirectly or not at all,” the research and advisory firm writes. “A customer with a small number of installs and a high number of employees, could see bills in the $Millions per annum.”

The new subscription model replaced “the now legacy” Java SE subscription and legacy Java SE Desktop subscription. Customers of those legacy products will continue to receive the original benefits and “may renew under their existing terms and metrics.” But IDC warns that this promise “shouldn’t be considered a guarantee.”

Oracle is monetizing what it acquired with Sun

When it gained control of the JAVA software with its acquisition of Sun Microsystems in 2009, Oracle said it was “the most important software Oracle has ever acquired.” Since then, it has been on a mission to monetize the formerly free software.

Fast-forward to 2023, and that mission entails switching from older named-user and processor-based pricing models to an employee-based licensing metric. According to the IDC article above, that means you must pay based on the total number of full-time and part-time employees in your organization, whether they use the software or not. So, rather than paying for value derived, you’re paying based on your company’s total headcount — and potentially those of third parties to which you may outsource some functions — regardless of how many are actually using the programs.

You may be somewhat familiar with Oracle’s License Verification Form, or “LVF,” sent out annually to Oracle enterprise customers along with a request for declaration of usage.

An Oracle auditor could use public information (such as public companies’ 10K statements, state and local governments’ Comprehensive Annual Financial Reports (CAFR), and non-profits’ published 990 tax forms) to compare customer verifications. If a discrepancy is revealed, the auditor could decide to use whichever number is greater (resulting in a potential non-compliance finding), and the customer would then bear the burden of proof to verify the correct number.

Who really benefits?

Simplified or not, the true aim behind this licensing change seems to be the creation of a much more seamless sales process for Oracle. All impacted licensees should be examining what they stand to gain or lose from their vendor’s rejiggered pricing mechanism. If you sign up for Oracle’s commercial support of Java, make sure you understand the true and potential future costs, and then explore your options.

There are alternatives. “Developers and organizations can choose to use the open source version of Java known as OpenJDK for free without support or get support via a commercial vendor,” explains ITProToday.

Rimini Street clients can tap into the expertise of our Strategic Services Group for additional help in understanding the impact of this new licensing model and what options may be available to mitigate any financial pain.

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