Most of the ‘things’ in IoT will be heavily reliant on software – both embedded and external – and by adopting the right software licensing regimes, ‘thing’ manufacturers can generate significant new revenue streams, says Gartner.
In a report Market Trends: Move Beyond Homegrown Licensing and Entitlement as the IoT Creates New Revenue for Software Gartner says “Many makers of ‘things’ still apply a traditional ‘box’ mentality to products and don’t consider the extra revenue opportunities of licensing-controlled embedded software and applications.”
It argues that IoT is turning many ‘thing’ manufacturers into software vendors that need licencing and entitlement management (LEM) solutions to protect, differentiate and monetise their offerings and that, by changing their approach to licensing, they can maximise revenues.
Gartner also warns that, if they fail to do so, manufacturers will face challenges from the new generation of SaaS vendors offering software from the cloud. However, it says ‘thing’ manufacturers can use LEM for fine-grained control of access to cloud-based applications, or specific features within the application, because data in the IoT can reside either locally on the thing or in the cloud.
“LEM also enables flexible pricing and packaging, allowing manufacturers to: bundle product features, capabilities and capacities, ensure payment, provide verified upgrade paths, and create new revenue streams.”
According to Gartner, “By controlling product functionality and the features and capacities of Internet-connected devices via flexible licensing, device manufacturers will be better able to compete in current and new markets. They will also be able to come to market quicker with new products, new feature combinations and product enhancements.”
It adds: “Moreover, software-controlled configuration gives manufacturers more flexibility to regionalise their offerings and develop niche solutions for specific markets without having to manufacture separate product SKUs. Overall, this reduces the number of SKUs produced, lowering overall manufacturing costs while enhancing manufacturers’ ability to customise and regionalise products.”
Gartner then considers three options by which thing manufacturers can enable the requisite LEM functionality: packaged solutions from specialist providers; in house-developed solutions; embedded solutions implemented by vendors of the hardware and operating systems on which the ‘things’ are built.
Gartner favours the first approach and lists the main vendors of such solutions as Flexera Software, Nalpeiron, Reprise Software, SafeNet and Wibu-Systems.