The Internet of Things (IoT) which includes intelligent devices ranging from smartphones to medical robotics, is forecast to grow to 26 billion units installed by 2020, representing an almost 30-fold increase from 0.9 billion in 2009.
Adoption is predicated upon device manufacturers investing in innovation in this area, and their ability to realise a meaningful return on investment (ROI).
IoT transforms all hardware and appliance OEMs into software providers. Licencing and entitlement management technology provides the locking capabilities that enable manufacturers to protect and monetise the embedded software IP running on connected intelligent devices.
> See also: Rapid growth of the Internet of things will add economic value – Gartner
Device manufacturers faced with increasing global competitive pressure to reduce manufacturing costs that produce thinner margins can leverage the value created with internet-connected products to increase revenue.
However, to secure additional revenue, manufacturers need to recognise the role embedded software and/or software applications play in the IoT, and monetise this value.
Similar to the traditional software industry, device manufacturers need to protect the intellectual property contained in applications and monetise it through the adoption of licensing and entitlement management systems that control access to the Internet-connected device, its functions and features.
Licencing and entitlement management also enables flexible pricing and packaging, enabling the manufacturer to bundle product features, capabilities and capacities, ensure payment, provide upgrade paths, as well as new revenue streams.
By controlling product functionality, features and capacities of Internet-connected devices via flexible licensing, device manufacturers will better be able to compete in current and new markets via increased speed to market with new products, new feature combinations, and product enhancements.
However, the adoption of licensing and entitlement management may be inhibited by the inexperience of many device manufacturers with software, the software business itself, and the financial opportunities that software-driven devices create.
Many manufacturers still apply a traditional “box” mentality to their products, and fail to take into account additional revenue opportunities that licencing-controlled embedded software and software applications deliver. Additional complications can arise as manufacturers navigate the transition to software-driven, internet-connected solutions.
For success, strong leadership is needed to ensure that all departments are aligned around the new business strategy; and adopt the processes and business rules necessary to accommodate the business opportunities opened by the connected devices.