Moving Beyond Homegrown Licensing as the IoT Creates New Revenue Possibilities
Intelligent device manufacturers face many challenges as they try to maximize revenue streams from their devices that are connected to the internet.
A recent report from Gartner: Market Trends: Move Beyond Homegrown Licensing and Entitlement as the IoT Creates New Revenue for Software details several “Internet of Things” (IoT) market trends. The report details how connected device manufacturers can realize new revenue streams by moving beyond homegrown licensing tools and leveraging purpose-built software licensing and entitlement management technologies.
Gartner estimates that 30 billion devices will be connected to the internet by 2020, which means thousands of previously “unconnected” devices are being connected to the internet every day. As these devices become connected, IoT poses a bigger impact on business operations for vendors. This simple illustration shows one way that IoT is transforming products into solutions. One camera model is built and sold while embedded software and licensing can help configure the one device into many models or packages.
While the “hard” costs of the device are fixed, the right software licensing technology can reduce the manufacturers inventory carrying costs while driving new revenue streams without increasing the cost of manufacturing the device itself. In the example to the right, note that two products are based on one hardware platform "SnapAway" that is then differentiated with software. The “Friends” edition can capture more revenue while fixed costs remain the same. Not only can the camera manufacturer charge more, there are further opportunities downstream to offer additional software and services via software licensing after purchase.
This is just one of many trends from the recent report that we’ll review in future posts about how IoT is disrupting the model for how devices have traditionally been sold and supported, opening up new and exciting possibilities for device manufacturers – and customers – alike.