As hardware commoditisation takes hold, intelligent device manufacturers are looking to embed software to create value and differentiation. Vincent Smyth, General Manager EMEA at Flexera Software takes a closer look
Manufacturers in the intelligent device space, especially those of telecom, networking, computer peripheral, medical, industrial, and building automation devices, are facing unprecedented change. Organic growth and mergers/acquisitions challenge manufacturers to find new ways of solving problems to accommodate growth and remain responsive to growing customer requirements.
Rapid obsolescence, commoditisation and advances in technology challenge intelligent device manufacturers to anticipate new ways of creating value and differentiation.
To remain competitive and grow the business, intelligent device manufacturers are realising that the differentiating value is decreasingly in the device they manufacture, and increasingly in the embedded software and/or firmware that controls, enhances and runs that device.
A case example is, Ubiquisys, a manufacturer of small cell and femtocell technology. Keith Day, Vice President of Marketing at Ubiquisys shared these observations: “With the surge in adoption of femtocell technology, comes intense pressure to be flexible to our customers’ varying needs.
Femtocells look like hardware products but the sophistication and strategic differentiation is in our embedded Femto-Engine software.
It is therefore vital for us to be able to customise the capabilities of the Femto-Engine to meet each customer’s specific requirements.”
The question then becomes, how do you cost effectively customise the capabilities (and capacity) on devices to meet specific customer requirements without manufacturing a unique device for each customer?
Complex yet cost effectively
Many manufacturers have found that the key is to start with a single or a small number of base products. The best way to efficiently provide various device derivatives is to engineer one master product, from which, capabilities and capacity can be added and removed.
If those capabilities and capacities are implemented in software (or firmware), then use of an electronic software licensing and entitlement management system enables control over which customer gets to use which capability and capacity.
Even if capabilities and capacity are implemented in devices, using electronic licensing can help. If the device’s configuration can be controlled by firmware or software, then that controlling firmware/software can interrogate an electronic license and instruct the device how to configure itself.
Intelligent device manufacturers are learning that using an electronic licensing and entitlement management system to efficiently produce and maintain a complex product portfolio is best practice.
The flexibility of such a system allows manufacturers to introduce additional capabilities to existing customers, as well as reduce capabilities in order to reach low-end markets without eroding the manufacturer’s high-end price points.
Many early-stage intelligent devices followed similar evolution paths; they had all of their logic burned into their circuitry, then the circuitry became programmable, then a device-specific firmware layer was added, then the firmware became upgradeable, then the firmware became software, then the circuitry commoditised into a general-purpose computing platform.
With the standardisation of intelligent devices, manufacturers can more efficiently develop enhancements for their devices in software and even open those devices to software development by partners or by customers.
Regardless, of whether these intelligent devices become embedded Linux boxes, embedded PCs, or new platforms, the fact that software developed for them has become their differentiator makes that software a valuable asset that must not be given away for free.
To monetise that asset, if your device is complex enough to host a significant software layer, it is likely to be complex enough to offer multiple capabilities and capacity, each representing a tangible value to customers.
From your perspective, you want your customers to pay for the new capabilities you add in software as well as added capacity. From your customers’ perspective, they don’t want to pay for capabilities that they don’t use.
Using electronic licensing and entitlement management systems optimised for digital goods helps you, your distribution partners and your customers know who owns and who has received your products and which capabilities and what capacity have been enabled.
Using electronic licensing and entitlement management technology to grant access to only those capabilities and capacity, that have been paid for by a particular customer is the best practice for monetising your investment in your device’s software by controlling its usage and returns.
Enormous manufacturing efficiencies can be achieved by standardising your device’s platform and by adding value in software. In addition to this manufacturing efficiency, electronic licensing and entitlement management can also be key to revenue growth through new licensing, monetisation and pricing models.