Software Monetization Featured Article

Using Software Features and Functionality to Differentiate Products

July 12, 2016

Cloud, virtualization, mobility, and the Internet of Things (IoT) are causing disruptions and transformation.  The most important aspect driving transportation is software and that’s due to the flexibility software provides in defining features to differentiate products. Regardless of the vertical market but in particular, traditional hardware-based businesses, the next generation value is going to be created and sustained by the software. This includes the software that runs the hardware, and increasingly, the information the embedded software generates. Recently, Juniper Networks spoke at a webinar  with IDC where they talked about just that and described how the adoption of software has transformed their business from shipping boxes to delivering software-driven value to their customers.

The future of software monetization will also apply to monetizing the extracted data and with that will come the additional value of gleaning insight from this data to take action and design better products and services that your customers want.  In addition to understanding what your customer’s likes or dislikes are, you will be able to track their behavior, gaining valuable insight on  how companies will be able to differentiable themselves and  sustain their value. 

The need to change direction and focus for hardware vendors is worth highlighting on several scores.  First, from an R&D prospective, the trend in the last few years has been an accelerating investment in software.  Secondly, research demonstrates that hardware companies that become more software-centric, and implement a state-of-the-art software licensing and entitlement management systems, will outperform their competitors.

The reason for the latter is that with a software monetization strategy, hardware manufacturers that embrace the transition from shipping boxes to delivering value through software will be more agile to market and fast in responding to marketing requirements. These companies will  be able to deliver a myriad of pricing models, reduce their costs and be able to leverage the visibility they gain into their product usage data to respond quickly to market needs with new packaging  to attract  new customers and strengthen the relationship with their existing customers.

The challenges involved in making a successful transformation from hardware to software-based value are substantial. However, not “mission impossible.”  Great software monetization solutions for enabling the business transformation exist.  In fact, a useful resource on how to take full advantage of the move to a software-based world is the recent Gemalto (News - Alert) white paper, More Variety with Less Cost: Using Software Features to Achieve Product Differentiation. 

The paper covers in detail how and why device manufacturers understand the urgency of transforming themselves into software-based services companies and how the  old ways of doing business, by selling hardware devices only, are no longer the path to success.  Indeed, failure to accommodate change is rapidly becoming a recipe for failure. It also describes the power of such transformations to create sustainable differentiated value now and going forward.  And, it emphasizes why the tools, methodologies and support provided in the Gemalto Sentinel Software Monetization portfolio have been designed for device vendors to optimize the value of their software, protect their intellectual property and be in a position to create compelling experiences for customers that can meet or exceed expectations. 

There is an alternative for turning what may seem mission impossible into success.

Edited by Alicia Young