Background on the Oracle Java Licensing Change

In January of this year, Oracle significantly changed its Java licensing model. They released a new Oracle Java SE Universal Subscription Global Price List, discontinuing the sale of Oracle Java SE subscriptions based on the Named User Plus and Processor license metrics. Instead, Oracle introduced the Java SE Universal Subscription metric, which is per Employee (user).

What Was the Change?

Oracle made significant changes to its pricing model for Java SE subscriptions. Here’s an overview of the critical updates:

1. Introduction of Employee for Java SE Universal Subscription: The old licensing models, Named User Plus Licensing and Processor licenses, which were more consumption-based, have been replaced by a new license model called “Employee for Java SE Universal Subscription.” This new model focuses on the number of employees within an organization.
2. Everyone in the company needs a license: Oracle defines eligible employees as all full-time, part-time, and temporary employees, as well as agents, contractors, outsourcers, and consultants supporting internal business operations. Basically, everyone except your dog needs a license.
3. Removal of old licensing model: The previous licenses, such as Named User Plus and Processor licenses, are no longer available for Java SE subscriptions, but with Oracle, everything is a negotiation.
4. Validity of existing agreements: Despite the changes, existing licensing agreements like Java BCL, Java OTN, and Java NFTC remain valid and unaffected.

New Licensing Model Limit

The new licensing model limits 50,000 Oracle processors for running the Java SE Universal Subscription Programs. If an organization’s use exceeds this threshold, excluding processors on desktop and laptop computers, they must obtain an additional license from Oracle.

What Happens if You Are on the Old Model?

For organizations currently holding a Java SE subscription agreement based on the older Named User Plus and/or Processor licensing and pricing model, there are some important considerations:

• Contractual agreement honored: Oracle will honor the terms and conditions of existing subscription agreements. This means that organizations on the old model do not need to take immediate action and can continue operating under their current contractual terms.

• Transition to new model upon expiration: When the subscription agreement expires, Oracle may require organizations to transition to the new Employee-based licensing and pricing model. While Oracle's FAQ document mentions the option for existing Java SE subscription customers to renew under their existing terms and metrics, it's important to note that this document is not contractually binding. Therefore, organizations should be prepared to transition to the new model once their agreement expires

New Prices

Example for pricing

The organization has a total of 45,000 employees. Under the new licensing and pricing model, the annual subscription fee for the client will be calculated as 45,000 (employees) x $5.25 (subscription cost) x 12 (months) = $2,835,000.

• So, for a 1-year contract, the cost of the license = $2,835,000
• For a 3-year contract, the cost of the license = $8,505,000
• for a 5-year contract, the cost of the license = $14,175,000

What Do These Changes Mean for the Customer?

The changes in Oracle's Java licensing model will have various implications for different types of customers:

1. Increase in cost for most customers: With the introduction of the new licensing model based on employees, organizations may experience a substantial cost increase in some cases; we are seeing customers see their cost jump 3X or 5X relative to their previous cost. For instance, organizations that previously paid a certain amount for their Java usage may now face a multiplied cost under the new model. This increase in expenses can have a substantial impact on the organization's budget and financial planning..
2. Client consumption vs. Oracle cost value gap: This new change means that organizations must license the entire employee population, regardless of whether they use Java or not. Even if an organization has only one Java installation or a limited number of users requiring Java, they must obtain licenses for the entire workforce. This creates an unusual dilemma for customers with limited Java usage who now need to license all the employees in the company..
3. Ambiguity with the subscription model: The ambiguity surrounding Java's transition to a subscription model continues to persist, setting it apart from core Oracle Database/WebLogic products that are typically sold with a License and Maintenance structure. Even though this change isn't new, many customers, especially those accustomed to engaging with Oracle for database/WebLogic solutions, haven't fully grasped the transformation. Contrary to the traditional approach of large license fees supplemented by smaller maintenance costs, this new subscription model ensures that the precise fees will still be in effect at the end of your 1, 3, or 5-year agreement..
4. Back penalties: As part of Oracle's standard Java audit, organizations may face back penalties for non-compliance with the new licensing model. If an organization is found to have used Java without the appropriate licenses, it may be liable for penalties covering past usage, typically extending three years into the past. These penalties can significantly impact an organization's finances and necessitate additional costs to rectify non-compliance..
5. More confusion and frustration for the customer: Oracle has caused significant confusion around licensing and consumption that appears to favor their interests. Initially, they surprised customers in 2019 by unexpectedly making Java commercial midstream based on various versions and releases instead of introducing a new product or edition, then they added to the confusion by creating a divide between Java and Open JDK. Oracle's complexity didn't stop there; they attempted to implement the Oracle Processor Definition partitioning policy on the old licensing model, insisting that customers pay for all the centers in their environment. Now, customers find themselves having to pay for every user in their organization.

What is Oracle Doing Today?

Oracle has implemented several aggressive actions and strategies to go hand in hand with these new Java licensing changes. Customers need to be aware of these developments and take the necessary steps to navigate the evolving landscape.

1. Email communication: Oracle’s Java sales teams have swiftly adapted their sales tactics and initiated proactive communication with customers. They are contacting existing and potential clients, addressing the Java licensing/compliance shortfall, and informing them about the new licensing model. These communications often include the number of Java downloads from Oracle’s website and the customer’s employee count. Oracle representatives are using this information as a basis to discuss and propose Java licensing requirements with customers.
2. Monitoring downloads and usage: Oracle closely monitors customer Java-related activities, including Java downloads and installations that are dialing back to Oracle, for example, auto-updater. They have limited visibility into the Java products installed and running in the customer's environment. By leveraging this information, which can be highly subjective and inconclusive, Oracle aims to start compliance conversations with the customer by bringing up the new licensing model and identifying any gaps or discrepancies that may require additional licensing. Organizations need to be aware of this monitoring and proactively identify their Java installations to align with licensing requirements by conducting internal Java ELP or hiring an external company like LDS to perform a baseline
3. Assessing back penalties: With the implementation of the new licensing model, Oracle is conducting audits and assessments to identify any non-compliance with Java licensing requirements. If organizations are found to be non-compliant, Oracle may impose back penalties, typically spanning three years. Organizations need to ensure that their Java deployments are appropriately licensed to avoid potential penalties.
4. Still allowing the old model: While Oracle has introduced the new Employee for Java SE Universal Subscription license model, we see on a case-by-case basis that they still allow customers to make an exception and purchase under the old Processor+ NUP model. However, it is essential to note that this option is highly subject and might disappear anytime in the future..

Recommendation for the Customer

Perform a Java Baseline and Quantify Usage and Cost:

Conduct a thorough assessment of your Java deployments to determine the extent of your use and associated costs. This will provide you with a clear understanding of your licensing needs and potential areas for optimization

Negotiate With Oracle Based on Value and Actual Consumption Data:

Engage in negotiations with Oracle by leveraging your knowledge of your organization's specific Java usage and value. Use your baseline data to demonstrate the actual consumption of Java and highlight the gap between consumption and value. This approach can help you negotiate more favorable terms and pricing that align with your actual needs.

• Identify all Java installations: Conduct a comprehensive inventory of all Java installations across your organization. This includes both licensed and non-licensed versions, ensuring you have a complete overview of the “paid” Java footprint

• Evaluate whether Java requires commercial licensing: Review your Java deployments to determine if they fall under the scope of commercial licensing. The chart below shows which versions/releases are paid vs free.

• Evaluate if Java can be removed, replaced, or covered under a redistribution agreement: Explore options to remove or replace Java deployments with alternative Java releases or solutions. Additionally, assess if any of your Java deployments are covered under redistribution agreements, which can provide cost-saving opportunities

• Please read our blog post on Java Optimization.

Seek Professional Third-Party Assistance for Oracle Java Licensing.

Recent changes have made navigating Java licensing to ensure compliance even more complicated. That's why collaborating with licensing experts who are well-versed in Oracle's Java licensing policies is more critical than ever. These experts can help you unravel the complexities of Java licensing and fine-tune your usage to reduce expenses.

Licensing Data Solutions (LDS) is your reliable ally in optimizing Java. Our team, specializing in Oracle licensing, offers customized solutions that assess your needs, negotiate with Oracle based on value, and guarantee compliance. By utilizing LDS, you can make knowledgeable decisions that align with your business objectives, enhancing potential cost savings. We offer a free 60-minute strategy call with our specialists to further assist you in this process. This one-on-one consultation is the perfect opportunity to address your specific concerns and discover how LDS can best support your Java licensing needs. Take advantage of this opportunity to maximize your benefits and ensure full compliance. Contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. today to schedule your free strategy call.

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