Embedded developers are evolving as embedded systems increasingly become combinations of off-the-shelf hardware running solution-specific software. Because of this transition, software is becoming a more important part of an embedded system’s intellectual property value. Hardware vendors are finding that they are now software vendors, and this evolution is forcing an operational change that some vendors are finding very challenging and others are seeing as an opportunity.
Beyond the transition to software-focused embedded solutions, developers are facing problems with deliberate and unintentional misuse of their technology, tampering and theft of IP. Usage enforcement, copy protection and theft prevention can guard against these threats, but they are only the first step toward unlocking the potential value of source code. Monetization of intellectual property is the goal, and this requires a focus on both revenue and profitability.
To monetize IP by either increasing revenue or reducing costs, intelligent device manufacturers need to leverage the four aspects of a successful software monetization strategy -- access and usage control, flexible packaging, process management, and product usage tracking. A comprehensive embedded software monetization strategy will provide:
Use the tabs above to explore all four aspects of a comprehensive embedded software monetization strategy now.
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When software monetization strategies are implemented successfully, intelligent device manufacturers are able to simultaneously offer a better customer experience and a more profitable solution. More specifically, an effective embedded software monetization strategy will unlock the following benefits:
- Increased Revenue
- Product and Brand Integrity Preservation
- Intellectual Property Protection
- Operational Cost Reduction
- Customer Experience Enhancement
Controlling Access to Your Intellectual Property
The software embedded within an intelligent device is typically a vendor’s most valuable asset. It not only holds all the development secrets hackers or competitors would love to gain access to, it also determines how the product functions. Stolen code can end up in the hands of competitors or be used to reproduce “knock-off” versions of a similar product. While theft of trade secrets is one threat, for many intelligent device manufactures, so is tampering. Both scenarios have great potential to damage overall market share and therefore decrease revenue potential. Tampering with the software embedded within a device can change how the device functions. This can provide users with access to features they have not paid for or, even worse, could result in regulatory compliance problems. Without proper protection, intelligent device vendors are unknowingly leaving their code vulnerable to tampering.
By effectively controlling access to the source code of the software, the intelligent device vendor is able protect revenue and safeguard the integrity of both their brand and their products by preventing product tampering, reverse engineering, and IP theft.
Controlling Use of Your Product
Usage control is the next piece of the monetization puzzle. Vendors must be able to control the use of their software at the product and feature level to prevent overuse of their offerings – deliberate or unintentional – and ensure that they are being fairly compensated. As the intelligent device market continues to mature, it will be critical for vendors to minimize manufacturing costs while achieving greater flexibility in their product packaging. This is done through feature-based licensing. By providing customers the flexibility to license software features of intelligent devices already on-premise, and by controlling that access, vendors can create new revenue opportunities while reducing manufacturing costs.
Feature-level control over software is also the key to flexible pricing and packaging strategies which also impact profitability by enabling you to attract the widest variety of customers without increasing manufacturing costs. Use the tabs above to learn more about how to use software licensing to improve your product pricing and packaging strategies now.
A key trend in the embedded market is the decoupling of software from hardware. This has allowed vendors to optimize revenues by pricing and selling the software and features that it enables separately from the device on which it runs.
An effective software licensing strategy will help device manufacturers develop sophisticated packaging and pricing strategies. Feature-based licensing and entitlement management opens the door to a world of marketing and sales tools and allows device manufacturers to develop and maintain a single, feature-rich application installed on all devices. The functionality of the device is then controlled through licensing. This enables software vendors to ship the same product with different functionality to different customers at varying price points and upgrade products remotely with lower support and fulfillment costs, thus delivering a better customer experience.
In the past, if a vendor wanted a premium and a standard version of a piece of equipment, they would build two applications for installation on two different hardware platforms. If a standard customer wanted to upgrade to a premium device they would have to return their old device and wait for the vendor to ship them a new one.
With feature-based licensing and entitlement management, device manufacturers can develop and maintain a single, feature rich application which is installed on all devices. The functionality of the device is then controlled through licensing. This enables software vendors to ship the same product with different functionality to different customers are varying price points and upgrade customers remotely with lower support and fulfillment costs and delivering a better customer experience – a true win-win situation.
Increasing Operational Efficiency and Improving Customer Experience
Realizing the need for effective software licensing is only half the battle. Development of a centralized process for management of all software licensing and entitlement management tasks is critical to ensuring internal operational efficacy, and cleans automated processes which benefit both the vendor and the end-user. As with an on-premise licensing implementation all of the processes associated with software monetization can be centralized via a proven entitlement management system.
An effective entitlement management system will enable you to easily manage entitlement creation, delivery, activation, updates, and usage tracking. These system are also designed to seamlessly integrate with other business-critical back-office systems including but not limited to ERP, CRM, billing, and marketing automation systems. This integration capability will help you to develop automated product fulfillment, customer service, and support processes, ultimately reducing operating costs and improving customer experience.
Product Usage Tracking & Reporting
The benefits of software licensing do not stop with control or packaging enhancements. Implementation of a sophisticated licensing and entitlement management system also provides a means to start tracking product activation and usage right down to the feature level. Intelligent device vendors can use this information to drive decision-making around product packaging, roadmap investment, sales, and marketing strategies. Product management and engineering teams can discontinue feature combinations that are unpopular and create software packages containing the most valued features that customers and prospects want.
Marketing and sales teams can utilize customized reports to better determine what, when, and how products are being used and leverage this invaluable data to plan, launch, and execute more effective sales and marketing activities. End-user registration data can also help vendors who sell via multiple channels to identify and gain direct access to every individual who uses one of their products.
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