By Tu Le
As more companies (both software publishers and intelligent device manufacturers) move towards virtualization, software licensing is evolving from on-premises licensing models—concurrent, node-locked, perpetual, etc.—to monetization software license models based upon usage data—pay-per-logon, pay-per-use, pay-per-period, etc. The market trend for 2012 and beyond labeled as "adopting Cloud" is becoming more mainstream and ubiquitous because, in the past 5 years, virtualization technology has transformed datacenter computing from physical to virtual.
As software licensing models slowly, yet surely evolve to the Cloud eco-system world, it is important to understand the need for a similar evolutionary process to happen as it did for datacenter computing. Today, traditional software license models rely solely upon the ability to uniquely identify and enforce to machine parameter(s). For example, if you bought Microsoft Office, you had the right to install and run that application suite on one computer. The ability to identify a physical machine in order to enforce license rights is then critical to preventing license leakage. Now, with the ever increasing use of virtualization technology, it has become impossible to uniquely capture the true identity of a machine.
As the next platform combination of application and smart device become more reliant upon the Internet to becoming "Cloud ready," the amount of usage data will increase exponentially. Everywhere we go, we leave behind bread crumbs of data, which are knowingly being collected by Apple and Google for future market research. Whether it is shooting angry birds, rotating color shapes to create the biggest combo break, furiously slashing fruits, or tapping on an ad, data is being created and stored.
A study from Cisco Systems on Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2010-2015 revealed that usage data from consumers to enterprise applications is driving the traffic of the Internet. For example, total raw byte transmission throughput is on average between .24 exabytes (1EB is equivalent to 1,000,000 terabytes) per month today and expected to grow to 6.3 exabytes by 2015 – a 26-fold increase over 2010. A majority of this usage data contributed is from the advancement of embedded and software applications.
The future trend suggests more companies will be looking beyond the traditional software licensing models to help grow top-line revenue and to reduce revenue leakage. Various usage models from per user, per storage capacity, or per throughput, are unfolding in new products and services every day.
Check out these related blogs on virtualization, cloud and usage data models and trends:
What's your Cloud strategy? Are you monetizing data usage? What business models are you using to create more recurring, predictable revenue streams?