An emerging trend in the embedded market is the decoupling of software from hardware. This trend has allowed vendors to optimize revenues by pricing and selling software and the features it enables separately from the device on which the software runs.
Software is often a critical component of embedded systems, but many embedded vendors have difficulty establishing the value of the software.
The value of the hardware alone may be limited, and customers may expect hardware prices to decrease over time. However, in many cases, the perceived value of the software that runs the process is significantly higher.
Building Incremental Value
By enabling specific features, embedded vendors can build incremental value, therefore realizing increased revenue from the software that powers their devices. In order for embedded systems vendors to move toward a software-centric approach, licensing, feature management and compliance are vital business enablers.
Below are the components of an effective rights management licensing solution for vendors of embedded systems:
- Earn Incremental Revenue
Many companies have found that by managing product configurations efficiently and by offering flexible packaging and pricing options, they can introduce business models that meet market needs and earn incremental revenue.
Licensing can enable vendors to separate regular maintenance updates from the delivery of new functionality. This assists them in differentiating between maintenance and higher value software deliveries, and charging accordingly.
When delivering high-value software, businesses can benefit from offering various flexible licensing models such as feature-control, usage-based, execution-count and time-limited licensing.
For example, a manufacturer of networking equipment may want to offer feature-control licenses to enable end users to purchase capabilities such as telephony and security for a router. Various capabilities could be purchased for perpetual use, restricted to a limited number of executions or until a certain date. These types of usage- and time-based licenses enable the vendor to offer greater flexibility in pricing and packaging products.
- Reduce Manufacturing Costs
The use of licensing can drastically reduce manufacturing costs. Optimal licensing capabilities enable multiple product configurations from one primary code build. Historically, the sale of multi-function printers with various features required the manufacture, shipment and distribution of multiple, distinct hardware devices. Through the implementation of flexible licensing options, these same vendors could reduce operational costs by manufacturing one programmable device.
Through the implementation of licensing, vendors can also manage and control their distribution channels. This can also be particularly effective if vendors sell through a distribution channel that may configure their application prior to the end customer sale.
In addition to reducing manufacturing costs, the implementation of a licensing model for embedded systems will enable vendors to adjust terms without the need for any software changes. This allows vendors to adjust to evolving market conditions quickly and efficiently.
- Embed Licensing Within the Current Environment
Embedded systems are created for very specific tasks; therefore, every aspect of the device is designed to minimize costs. The resulting system often runs on a non-standard platform, has strict performance requirements and very little spare memory.
Additionally, in order to operate in embedded environments, a licensing system must be designed not only to leave a small footprint but also to have no hardware dependencies, and be easily ported to nonstandard operating environments.
Traditional rights management systems have not been available to accommodate this environment. The evolution of rights management technology allows vendors of embedded systems to enjoy the licensing benefits that software vendors have been experiencing for more than two decades.
- Improve the Customer Experience
By integrating a feature-licensing system, vendors can now offer a diverse portfolio of capabilities to the end user a la carte.
Traditionally, end users seeking an embedded system were required to purchase complete software, hardware and maintenance packages all bundled together. Furthermore, upgrades required the purchase of a new hardware device and on-site support.
Through the integration of licensing, customers can purchase advanced features and new functionality easily and automatically. These features can be enabled by means of electronic licensing rather than through complex software upgrade processes. There is no need for an on-site upgrade in order to swap out the actual hardware. Customers can purchase the features as they require them, in some instances even over the Web.
Incorporating licensing to control features, usage, and product configurations also allows embedded systems vendors the ability to facilitate customer compliance with software license agreements. Current regulatory requirements demand this type of careful tracking and documentation of licenses. In addition, decoupling regular maintenance from software functionality provides customers with a greater sense of what they are actually purchasing and their entitlements.
Conclusion: The decoupling of software from the hardware in which it resides is an emerging and important trend. Implementing the proper licensing solutions to do so can benefit both vendors and their end users.
Kenneth Chow is general manager ofSafeNet’s software protections business unit. SafeNet recently launched Sentinel RMSe, which lets vendors of embedded systems obtain the same benefits from licensing as software vendors.