Software Monetization Featured Article

Gemalto Addresses Growing Popularity of Software in Hardware-centric Devices

July 10, 2017

It’s been several years since Marc Andreessen famously announced that software is eating the world. His pronouncement was prophetic. The focus on software has grown significantly in the past few years. Indeed, today much of the innovation we’re seeing in networks and products is on the software front.

Just consider the following:

  • Software is being used to automate and provision networks. And that will allow the applications and services running on those networks to be introduced and spun up more quickly and efficiently.
  • Data centers employ virtual machines and containers, allowing for more efficient use of server resources and more portable workloads.
  • Service provider network elements, like firewalls and session border controllers, are getting virtualized too. That means rather than being delivered as hardware appliances running software, they are available as software-only solutions that can work on the commercial-off-the-shelf hardware of the customers’ choice and help network operators avoid vendor lock in.

But it’s not just network operators that have embraced software-centric positions. Companies of all types are beginning to see the value of leveraging software to differentiate their offerings in the marketplace. For example, Tesla does remote software uploads to its customers’ vehicles for feature updates. GE and its competitors are now also working to transform themselves into software companies.

Differentiation via software as opposed to hardware – which is the way hardware companies have traditionally delivered new products and features – enables companies to provide a broader range of product options, and to deliver these solutions when and where they’re needed via networks instead of expensive and time-consuming shipping processes. And this new focus on software, Gemalto explains in a recent white paper, calls for new software licensing solutions.

“We expect that by 2020, a failure to put in place a licensing and software monetization system will result in a 20 percent drop in potential revenue generated from software for device manufacturers connecting to the IoT,” says Laurie Wurster, a research director at Gartner (News - Alert).

Gemalto says the licensing solution should interconnect with back office systems like ERP to allow for automation and ease of use.