More than ever, embedded software is playing a central role in intelligent device manufacturers’ go-to-market strategies. This trend is especially apparent in markets such as telecom, test and measurement, healthcare, and industrial automation – where manufacturers are under increasing pressure to innovate, rapidly enter new markets, control costs, maximize incremental revenue from existing customers, and deliver a competitively differentiated customer experience.
As embedded software has become more integral to their business, more and more manufacturers are discovering the power of software licensing. With licensing, manufacturers can turn device features and/or capacity on and off as appropriate. This allows them to charge customers for the capabilities they want, while not charging them for capabilities they don’t want. Specifically, licensing enables telecom equipment providers to more effectively use embedded software as a means of managing and monetizing the features and functionality they provide in their devices.
By adopting the right licensing models, telecom equipment providers can:
- Produce different products on the same hardware chassis. This drives down costs by eliminating the need for additional production lines and minimizing the number of SKUs that have to be kept in inventory.
- Create innovative products on existing hardware chassis. This reduces the cost and time it takes to bring differentiated products to new or existing markets.
- Up-sell existing customers by simply activating additional device capabilities or capacity. This makes it easier to capitalize on incremental revenue opportunities.
- Meet evolving customer needs without requiring them to swap out hardware or otherwise disrupt their operations. This makes for a more positive ongoing customer experience
These examples highlight why software licensing is such a compelling best practice for intelligent device manufacturers.
In fact, in today’s highly competitive and fast-moving markets, the skill with which manufacturers structure the licensing of their embedded software – and the diligence with which they manage their customers’ entitlements – may well turn out to be what separates market leaders from other players. Today, manufacturers are applying software-based licensing principles to manage a wide range of functions in hardware ranging from telecommunication devices and location intelligence equipment, medical equipment, supply chain automation, automobiles, test and measurement, and storage management.
This whitepaper outlines key trends and opportunities influencing telecom equipment providers, and how Flexera Software FlexNet® Producer Suite for Intelligent Device Manufacturers can help these companies to fundamentally improve their business. In addition, the whitepaper illustrates the power of licensing-based solutions with a customer implementation scenario.
Trends and Opportunities in the Telecommunications Equipment Arena
At a macro level, a convergence of business issues is driving the software-based differentiation of telecom equipment – all of which can be capitalized upon with software licensing and entitlement management solutions:
- Changing economics of intelligent device manufacturing: All segments of the telecommunications sector are driven by time to market. This fact has driven the rise of standards-based hardware (such as AdvancedTCA) and core operating system software, which has in turn allowed telecom equipment providers to gain economies of scale. Intelligent device manufacturers are increasingly buying, versus building, core subsystems and system software. As a result, their role is evolving to more of an integrator, and less of a manufacturer. Solution providers seek better ways to differentiate themselves; software is a key means to creating competitive advantage and driving incremental revenue.
- Growing revenue contribution from software: As a corollary to the commoditization of hardware, many telecom equipment providers are focusing more resources on software development. As such, software enables new revenue sources and provides a way to deliver a superior, differentiated customer experience.
- Software-enabled supply chain transformation: With the underlying hardware becoming more powerful and at the same time commoditized, equipment manufacturers can now build fewer base configurations and deliver more functions. Product capabilities, capacity, versions and price points can be created and modified based on functions that can be turned on and off by licensing of the embedded software. This dramatically streamlines the supply chain and manufacturing processes, as well as lowering inventory carrying costs.
The challenge for the telecom equipment provider is to determine how to enable or limit access to certain functions of software, without changing the configuration or SKU of the product. Licensing-based approaches allow providers to enter new markets with a full-function device, and then, as competition enters the market, create lower or higher price points with the same device by enabling or disabling software functions
- Brand and revenue erosion from grey market abuse: As underlying device configurations become more standardized, grey market theft can be perpetrated more easily. For example, demonstration models of products increasingly find their way into the grey market via channels for selling used equipment. These devices are running improper software and typically do not function correctly, posing a serious threat to the customer experience. In addition, grey market sales jeopardize maintenance revenues, as manufacturers lose track of device ownership and thus the maintenance relationship.
- Customer preferences: In today’s ultra-competitive business environment, telecom equipment customers are demanding more flexible pricing models, easy access to upgrade features, and a superior customer experience. Embedded software licensing capabilities allow intelligent device manufacturers to meet all of these customer requirements by enabling important capabilities such as field upgrades and a consistent, streamlined customer experience across products.
Turning to Flexera Software for Answers
As telecommunications manufacturers address these trends, they increasingly recognize that they face similar issues as software companies. Today’s intelligent device manufacturers are looking to Flexera Software to help them:
- Reach new markets by creatively packaging and pricing embedded software
- Build revenues by better monetizing capability and capacity
- Cut manufacturing costs by using software to differentiate capabilities on zs, and thus reduce the number of unique SKUs
- Accurately track customer entitlements and usage
- Track channel partner activity, and maximize service and maintenance revenues
- Prevent unauthorized use of capabilities without cutting off legitimate customers
- Reduce the operational costs associated with shipping software upgrades
- Cut customer support costs by offering customers and channel partners self-service and keeping them current on the latest version
- Make better development and marketing decisions based on device usage data
FlexNet Producer Suite addresses telecom equipment providers’ unique needs
FlexNet Producer Suite for Intelligent Device Manufacturers is the most comprehensive end-to-end solution for electronic licensing and entitlement management available today. Telecom equipment providers can benefit from Flexera Software’s support for the largest number of embedded software license models; FlexNet Producer Suite provides a single operations view to easily integrate products across multiple software licensing schemes. Flexera Software supports dozens of platforms – the widest range in the industry – enabling telecommunications manufacturers to use it across both large- and small-footprint devices.