1. WHITEPAPER
How Intelligent Device Manufacturers
Are Using Embedded Software
to Grow Revenue

2. How Intelligent Device Manufacturers Are
Using Embedded Software to Grow Revenue
Overview
Increasingly, the value of your intelligent device is based
on the software or firmware delivered with the device. The
flexibility of software allows you to sell many differentiated
products while streamlining your manufacturing process.
Protecting your software R&D investment is critical to
monetizing your platforms and ensuring a steady revenue
stream. But the fact is, paper- and trust-based licensing
programs are no longer adequate. Moving to electronic
licensing allows you to protect and grow your revenue,
without complex changes to your manufacturing processes.
This whitepaper describes how you can use electronic
software monetization technology to protect and enhance
your products, and how to distribute updates and upgrades
to your already-deployed device, regardless of your industry:
networking, telephony, imaging, printing and medical devices.
Creating Differentiated Products
Chances are, you are already enhancing your devices with
significant software development. It’s time to monetize that
investment using electronic license management, which
ensures that your devices are used in a manner consistent
with your license terms.
In addition, it is likely that you are facing intense competition,
resulting in your devices becoming commoditized, thus
driving down your profit margins. If you are looking for
creative ways to increase margins without re-tooling your
manufacturing line, look to differentiating your devices
through their software capabilities.
Rather than relying on special configurations to differentiate
your devices, using software that implements new
capabilities lets you ensure that those capabilities are only
available to users who are entitled to them. These multiple
configurations will set you apart from your competitors and
provide better delineation within your own product lines.
Flexible Device Configuration
Many intelligent device manufacturers today are simplifying
their production lines by manufacturing the same device
for multiple models. They may package model-specific
software with that device. To differentiate the device, they
include model-specific configuration of both the device
and software.
A License as a Tamper-Resistant Configuration
Today, you may already differentiate device models by
their configurations, but how easy is it for someone to
intentionally or unintentionally copy that configuration to
a device licensed for a less-expensive configuration?
Robust license management systems are designed to encode
configuration information in a human-readable form,
whether it is a device or software configuration—and then
to enforce the limits of that configuration. While in this
form, if the configuration is unintentionally or intentionally
changed, the license management system can detect such
a change. Furthermore, once the configuration is bound to
a device, it can’t be copied to another device without the
consent of the intelligent device manufacturer.
Does this mean that the intelligent device manufacturer
must manually approve all transactions where a customer
has a legitimate reason to move a configuration from one
device to another? Not at all. Automated license entitlement
and license fulfillment systems can be employed that allow
customers to self-manage their fulfillments within parameters
you define. Such systems can be made to implement
business policies that prevent abuse; for example, you can
allow the customer to move/rehost a license to another
device once every six months.

3. How Intelligent Device Manufacturers Are Using Embedded Software to Grow Revenue
3
Compliance and Enforcement
Introducing license management into your customer base does
not imply that you mistrust your customers. These days, CIOs
are concerned that their employee base might unintentionally
use the products they buy beyond the agreed upon terms.
However, these same CIOs don’t have the budget to do an
internal audit to determine how these products are used.
Instead, they look to their vendors for an automated means
by which they can be assured that all of their licenses are
in compliance. Therefore, license management is often a
welcomed feature of products they buy.
That said, even an honest purchasing manager does not
guarantee that the users they represent share the same
respect for your intellectual property. If an employee has
become disgruntled and is looking for a way to hurt a
current or former employer, he might choose to do this by
stealing from you.
Of course, there are also regions of the world which do not
honor contractual terms and impose their own, more liberal,
standards for the use of your products. Protecting both you
and your distribution partners from this potential abuse can
be valuable to your business.
Possession is No Longer 9/10 of the Law
Historically in the intelligent device market, the adage of
“possession is nine-tenths of the law” has been the norm.
That is, once in physical possession of your device, the
customer had access to all of its capabilities. Adding
license management to a device still gives full access to the
possessor, but now your customer is in possession of the
license, not the device.
As a first step, you can pre-install an electronic license on
devices before you or your distribution partner sells the
device. This method alone will reduce manufacturing costs,
but you can do even more.
To allow flexibility, an electronic license can expire over
time or apply only to a particular version of the device and
its software. These characteristics give you the ability to
grant electronic licenses for a variety of different reasons.
Entitlements can be granted as a result of many events,
for example:
• Customer purchases the product
• Customer purchases new capabilities for an already
deployed product
• Customer purchases additional capacity for an
already deployed product
• Customer renews (or elects not to renew) his
maintenance plan
• Customer accepts a trial offer to upgrade his device
• Customer accepts a limited-time promotional offer to
upgrade his device
• Customer purchases a companion product
• etc.
Entitlement upgrades are then fulfilled by only delivering
the license, so in addition to protecting software from
unauthorized use, it avoids the expensive and inconvenient
process of having to replace the device.
Visibility through Your Distribution Chain
When you sell a device through the channel, it is likely that
you have no visibility as to when and where your product is
fulfilled. While you want to honor your distribution partners’
right to own and manage your common customers, knowing
exactly what is being fulfilled, when it is being fulfilled, and
through what partner can give you valuable insight into
your business.
Instead of putting devices into the channel and never
hearing from those products again, you can create the
need for each device’s user to contact you in order to fulfill
a license for the device. This license fulfillment can be
automated, manual, or you can offer it both ways.
You can also offer registration in order to gain further
insight into your users, giving you the ability to touch the
end user through a long distribution chain.
Summary
Now that software is a differentiator for intelligent device
manufacturers, what used to be solution-specific devices
are becoming a platform on which to build solution-specific
software. This trend mimics the early days of software
development on what has now become the general-purpose
platforms we all use today.
As a result, intelligent device manufacturers have all
the opportunities, and all the challenges, of software
developers. Fortunately, device manufacturers have
available to them the tools and best practices to manage
their software offering.

4. How Intelligent Device Manufacturers Are Using Embedded Software to Grow Revenue
4
Maximize the Value of Embedded Software
To monetize their embedded software, device manufacturers
rely on Flexera Software FlexNet®
Producer Suite for
Intelligent Device Manufacturers. It can help you maximize
the value of software that’s embedded or bundled with your
devices by:
• Innovating product faster
• Reducing manufacturing costs
• Simplifying distribution
Flexera Software FlexNet Producer Suite for Intelligent
Device Manufacturers enables device manufacturers to
unlock new licensing, packaging, pricing, and promotional
models; streamline manufacturing, inventory, and
distribution management; and simplify product updates.
About Flexera Software
Flexera Software helps application producers and
enterprises increase application usage and the value they
derive from their software. Our next-generation software
licensing, compliance and installation solutions are essential
to ensure continuous licensing compliance, optimized
software investments and to future-proof businesses against
the risks and costs of constantly changing technology. Over
80,000 customers turn to Flexera Software as a trusted and
neutral source for the knowledge and expertise we have
gained as the marketplace leader for over 25 years and for
the automation and intelligence designed into our products.
For more information, please go to:
www.flexerasoftware.com
Learn More:
You can learn more about this solution, download
datasheets, and watch Webinars by visiting:
www.flexerasoftware.com/devices

5. Flexera Software LLC
(Global Headquarters):
+1 800-809-5659
United Kingdom (Europe,
Middle East Headquarters):
+44 870-871-1111
+44 870-873-6300
Australia (Asia,
Pacific Headquarters):
+61 3-9895-2000
For more office locations visit:
www.flexerasoftware.com
Copyright © 2015 Flexera Software LLC. All other brand and product names mentioned herein may be the trademarks and registered trademarks of their respective owners.
FX_WP_EmbeddedSWGrowRevenue_Jan15