How Intelligent Device Manufacturers Are Using Embedded Software to Grow Revenue

W H I T E PA P E R

How Intelligent Device Manufacturers Are Using Embedded Software to Grow Revenue
Overview
Increasingly, the value of your intelligent device is based on the software or firmware delivered with the device. The flexibility of software allows you to sell many differentiated products while streamlining your manufacturing process. Protecting your software R&D investment is critical to monetizing your platforms and ensuring a steady revenue stream. But the fact is, paper- and trust-based licensing programs are no longer adequate. Moving to electronic licensing allows you to protect and grow your revenue, without complex changes to your manufacturing processes. This whitepaper describes how you can use electronic license management technology to protect and enhance your products, and how to distribute updates and upgrades to your already-deployed device, regardless of your industry: networking, telephony, imaging, printing, medical devices.

Flexible Device Configuration

Many intelligent device manufacturers today are simplifying their production lines by manufacturing the same device for multiple models. They may package model-specific software with that device. To differentiate the device, they include model-specific configuration of both the device and software.

A License as a Tamper-Resistant Configuration

Today, you may already differentiate device models by their configurations, but how easy is it for someone to intentionally or unintentionally copy that configuration to a device licensed for a less-expensive configuration? Robust license management systems are designed to encode configuration information in a human-readable form, whether it is a device or software configurationand then to enforce the limits of that configuration. While in this form, if the configuration is unintentionally or intentionally changed, the license management system can detect such a change. Furthermore, once the configuration is bound to a device, it cant be copied to another device without the consent of the intelligent device manufacturer. Does this mean that the intelligent device manufacturer must manually approve all transactions where a customer has a legitimate reason to move a configuration from one device to another? Not at all. Automated license entitlement and license fulfillment systems can be employed that allow customers to self-manage their fulfillments within parameters you define. Such systems can be made to implement business policies that prevent abuse; for example, you can allow the customer to move/rehost a license to another device once every six months.

Creating Differentiated Products

Chances are, you are already enhancing your devices with significant software development. Its time to monetize that investment using electronic license management, which ensures that your devices are used in a manner consistent with your license terms. In addition, it is likely that you are facing intense competition, resulting in your devices becoming commoditized, thus driving down your profit margins. If you are looking for creative ways to increase margins without re-tooling your manufacturing line, look to differentiating your devices through their software capabilities. Rather than relying on special configurations to differentiate your devices, using software that implements new capabilities lets you ensure that those capabilities are only available to users who are entitled to them. These multiple configurations will set you apart from your competitors and provide better delineation within your own product lines.

Compliance and Enforcement

Introducing license management into your customer base does not imply that you mistrust your customers. These days, CIOs are concerned that their employee base might unintentionally use the products they buy beyond the agreed upon terms. However, these same CIOs dont have the budget to do an internal audit to determine how these products are used. Instead, they look to their vendors for an automated means by which they can be assured that all of their licenses are in compliance. Therefore, license management is often a welcomed feature of products they buy. That said, even an honest purchasing manager does not guarantee that the users they represent share the same respect for your intellectual property. If an employee has become disgruntled and is looking for a way to hurt a current or former employer, he might choose to do this by stealing from you. Of course, there are also regions of the world which do not honor contractual terms and impose their own, more liberal, standards for the use of your products. Protecting both you and your distribution partners from this potential abuse can be valuable to your business.

Customer renews (or elects not to review) his maintenance plan Customer accepts a trial offer to upgrade his device Customer accepts a limited-time promotional offer to upgrade his device Customer purchases a companion product etc. Entitlement upgrades are then fulfilled by only delivering the license, so in addition to protecting software from unauthorized use, it avoids the expensive and inconvenient process of having to replace the device.

Visibility through Your Distribution Chain

When you sell a device through the channel, it is likely that you have no visibility as to when and where your product is fulfilled. While you want to honor your distribution partners right to own and manage your common customers, knowing exactly what is being fulfilled, when it is being fulfilled, and through what partner can give you valuable insight into your business. Instead of putting devices into the channel and never hearing from those products again, you can create the need for each devices user to contact you in order to fulfill a license for the device. This license fulfillment can be automated, manual, or you can offer it both ways. You can also offer registration in order to gain further insight into your users, giving you the ability to touch the end user through a long distribution chain.

Possession is No Longer 9/10 of the Law

Historically in the intelligent device market, the adage of possession is nine-tenths of the law has been the norm. That is, once in physical possession of your device, the customer had access to all of its capabilities. Adding license management to a device still gives full access to the possessor, but now your customer is in possession of the license, not the device. As a first step, you can pre-install an electronic license on devices before you or your distribution partner sells the device. This method alone will reduce manufacturing costs, but you can do even more. To allow flexibility, an electronic license can expire over time or apply only to a particular version of the device and its software. These characteristics give you the ability to grant electronic licenses for a variety of different reasons. Entitlements can be granted as a result of many events, for example: Customer purchases the product Customer purchases new capabilities for an already deployed product Customer purchases additional capacity for an already deployed product

Summary

Now that software is a differentiator for intelligent device manufacturers, what used to be solution-specific devices are becoming a platform on which to build solution-specific software. This trend mimics the early days of software development on what has now become the general-purpose platforms we all use today. As a result, intelligent device manufacturers have all the opportunities, and all the challenges, of software developers. Fortunately, device manufacturers have available to them the tools and best practices to manage their software offering.

How Intelligent Device Manufacturers Are Using Embedded Software to Grow Revenue

Solutions that Maximize the Value of Embedded Software

To monetize their embedded software, device manufacturers rely on Flexera Software FlexNet Producer Suite for Intelligent Device Manufacturers. It can help you maximize the value of software thats embedded or bundled with your devices by: Innovating product faster Reducing manufacturing costs Simplifying distribution Flexera Software FlexNet Producer Suite for Intelligent Device Manufacturers Solution enables device manufacturers to unlock new licensing, packaging, pricing, and promotional models; streamline manufacturing, inventory, and distribution management; and simplify product updates.

About Flexera Software

Flexera Software is the leading provider of strategic solutions for Application Usage Management; solutions delivering continuous compliance, optimized usage and maximized value to application producers and their customers. Flexera Software is trusted by more than 80,000 customers that depend on our comprehensive solutionsfrom installation and licensing, entitlement and compliance management to application readiness and enterprise license optimization - to strategically manage application usage and achieve breakthrough results realized only through the systems-level approach we provide. Flexera Software is a privately-held company and an investment of private equity firm Thoma Bravo, LLC. For more information, please go to: www.flexerasoftware.com

You can learn more about this solution, download datasheets, and watch Webinars by visiting:
www.flexerasoftware.com/devices

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