Software Monetization Featured Article

New Opportunities and Challenges for Embedded Software Companies

July 03, 2017

Software that is embedded in a device – a phone, for example, or an appliance – once did little more than exist there.  Once the manufacturers of embedded software signed the bottom line and let their products out the door, their job was done, their opportunities were over and their control over the customer experience was non-existent. Today, there are more opportunities for the makers of hardware devices to create future revenue streams by leveraging their software with packaging, according to a recent white paper by software security solutions provider Gemalto (News - Alert).

“This shift toward leveraging software-based intellectual property enables more flexible pricing in an increasingly commoditized and competitive market,” wrote the authors of Gemalto’s “Embedded Software Monetization at a Glance Quick Reference Guide. “In addition to the revenue-generating opportunities this presents for intelligent hardware vendors, the trend also poses a number of risks. Intellectual property, for example, is vulnerable to piracy, illegal use, gray market trade, reverse engineering, theft, and tampering.”

It’s worth the disruption for this transformation. By taking a software monetizing approach to their hardware devices, manufacturers can increase sales, reduce costs, boost their competitive advantage, and penetrate new markets.  During this transformation, manufacturers will need to overcome some critical initial challenges, including:

  • IP theft resulting in unauthorized reproduction and distribution of “knock-off” products;
  • Malicious or unintentional device tampering resulting in altered functionality and regulatory non-compliance;
  • Inflexible feature management techniques resulting 5 in limited market penetration capabilities; and
  • Laborious upgrade and renewal processes resulting in high support costs and a poor customer experience.

To get around these difficulties, hardware device manufacturers need more control over their solutions.  Software protection and licensing mechanisms such as those offered by Gemalto protect applications from unauthorized access, and enable product configuration and management for increased efficiency. Embedded software monetization not only help companies secure their intellectual property, but also allow them to create a software-centric offering with flexible packaging to generate new revenue streams and better control the user experience so the embedded solution manufacturer isn’t throwing customer engagement onto the mercy of partners. With a good licensing solution, vendors are able to retain feature-level control of the device software, which (when managed properly) can reduce operational costs, creates a wider range of business models, and simplifies or automates sales and support tasks such as upgrades and renewals.

“The same technology that controls access to features can be leveraged to report on product and feature usage,” according to the white paper. “This data can be used to fuel usage-based business models or generate invaluable business intelligence. Licensing can be enhanced with entitlement management capabilities to streamline many of the manual processes associated with customer lifecycle management. Processes such as product activation, ongoing use, and upgrade management can easily be automated, further reducing operating costs and improving the customer experience.”

For a rundown of the solutions Gemalto offers that can benefit embedded software makers, visit