1. Software Pricing and Licensing Survey
Results and 2012 Predictions
Amy Konary
Research VP
Software Licensing and Provisioning
IDC

2. The Survey
2
ISVs and Intelligent Device
Manufacturers
• Sample Size = 205
• 77% describe primary product
as high-price/low-volume
• 82% identify as software
producer
Enterprises
• Sample Size = 97
• Wide range of
industries
• 54% $1B+ revenues
• 55% 5,000+
desktops
Where is your company or division
headquartered?
North America
(United States,
Canada, Mexico)
Europe
Asia Pacific Region
South
America/Central
America
Where is your company or division
headquartered?
North America
(United States,
Canada, Mexico)
Europe
Asia Pacific
Region
South
America/Central
America

3. The Survey- Enterprise Spending Profile
3
Q: Looking forward two years, will your software budget...
22.9%
20.8%
10.4%
7.3%
2.1%
1.0%
2.1%
1.0%
0%
5%
10%
15%
20%
25%
1-10% 11-20% 21-30% 31-40% 41-50% 51-60% 61-70% > 70%
(%) of Software Budget for New Licenses
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93
(%)
Decrease
Stay the same
Increase
Do not know

4. The Survey- ISV Licensing Revenue Profile
4
Q: In the next 2 years, my company’s licensing strategy will...
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93
(%)
Stay the same/no change
Moderate changes
Significant changes
Dramatic changes
47.0%
7.2%
9.6%
4.8%
8.4%
2.4%
4.8%
15.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Less than
$10 million
$11 - $30M $31 - $50M $51 - $100M $101 -
$500M
$501M -
$1B
+ $1B Don't Know
Annual Product Licensing Revenues (%)

5. Software Industry Megatrends
5
1. Shift from Perpetual to Subscription
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Subscription
Maintenance
License
WW Software Revenue Mix, 2007-2015, $M
Source: IDC, Fall 2011
6%
16%
58%

6. ISV Survey- Perpetual Domination
6
• 79% of software revenues derived via perpetual,
15% via subscription
• In next two years, group expects:
– perpetual license revenues to decline an average of 10%
– subscription revenues to increase by an average of 6%
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Year 1 Year 2 Year 3 Year 4
RecognizedRevenues($)
Perpetual
Subscription

7. Software Industry Megatrend
7
2. One Megatrend to Rule them all
Source: IDC, 2011
74%
of companies
using cloud expect
to increase cloud
spend in 2012 by
> 20%
US
Businesses
will spend
$36 billion
on cloud-
delivered IT
services in
2015
70%
of NA
companies
currently
using public
cloud
SaaS spending will
grow by 105%
IaaS spending will top
$33 billion
PaaS spending CAGR
hits 48.5%
2011-2015:
82% of net new commercial apps
will be developed for cloud in 2012
30%+ of 2014 spending on enterprise
apps will be via the cloud model
>80% of Global 2000 will still
have 50% of IT onsite in 2020
33% 33%
28%
Improve
Business
Agility
Increase
Scalability
Cost
Flexibility
Source: IDC NA Cloud Computing Survey, January 2011 n=603, and IDC #228845 (June 2011)

8. Two (Three) Approaches to Cloud
Deployments
• Designed for a market, not a
single enterprise
• Open to a largely unrestricted
universe of potential users
• Customers buy at specific
level of abstraction (server,
application, platform)
• Single-vendor or multi-vendor
Multiple unrelated
enterprises (shared)
Hybrid
• Enterprise’s cloud services
portfolio includes both
private and public cloud
services
• Some specific services are
delivered in a combination of
public and private models
(e.g., private cloud “bursting
to” a public cloud service)
Virtual and physical (non-
cloud) resources and
applications
Private
• Designed for, and access
restricted to, a single
enterprise (or extended
enterprise)
• An internal shared resource,
not a commercial offering
• IT Org is the “vendor” of the
shared/std service to its users
Resource
Isolation
Single enterprise/
extended enterprise
(dedicated)

9. ISV- Metrics
0%
10%
20%
30%
40%
50%
60%
70%
80%
Processor Core Seat (per
machine/per
server)
Seat (named
user)
Concurrent
user
Usage metric Financial
metric
(revenue,
royalty)
Today +2 Years
9
-18%
34%
-11%
-8%
7%
98%
43%
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93

10. Metrics, Satisfaction, Customer Preference
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Processor Core Seat (per
machine/per
server)
Seat
(named
user)
Concurrent
user
Usage
metric
Financial
metric
(revenue,
royalty)
Today ISV Satisfaction (%) Customer Pref.
10
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93

11. ISV- Focus on Usage-Based Pricing
• Consistent with the results of last
year's survey, with usage metrics
experiencing the most growth
compared to other models.
• Of the total survey population,
47% of vendors surveyed do not
monitor customer usage today.
• Of the survey population that is
offering usage-based pricing
today or plans on offering usage-
based pricing in the next two
years, 48% do not monitor
customer software usage.
11
0%
10%
20%
30%
40%
50%
Usage
metric
Today
+ 2
Years

12. Software Industry Megatrend
12
3. It’s a Virtual, Multicore World
 In 2005, virtual machines represented 4.5% of server
shipments; typically, there were three virtual
machines per physical server.
 By 2014, IDC estimates that VMs will represent
23.3% of server ships, with a density of 8.5 VMs
per physical machine.
 As for the server market, quad-core x86 is now the
standard, accounting for the majority of shipments.
 IDC research indicates that six-core processors
are quickly gaining ground and are poised to be
the new standard within 12–18 months.
Source: IDC, 2011

13. ENT Survey- Virtualization Adoption Profile
13
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Server virtualization
(% of servers)
Desktop virtualization
(% of desktops)
Hard partitioning (% of
physical servers)
> 80%
60-80%
40-60%
20-40%
< 20%
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93
Q: Which virtualization technologies has your organization adopted?

14. ENT Survey- Virtualization Management
14
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93
Q: How do you manage software licenses in your virtualized environments?
Automated commercial
license management
software
Software provided by the
(virtualization) vendor
Automated homegrown
software
Manual methods, including
spreadsheets
We don’t manage software
licenses in our virtual
environments

15. Software Industry Megatrend
15
4. Focus on Software License Compliance
Source: IDC/BSA Study, 2011
Software Piracy Losses by Country

16. ISV and ENT- Audit Statistics
• Most of the ISVs surveyed did not perform any
audits or reviews at all in the last year (60%)
• Most ISVs that performed audits did 10 or less
• For the vast majority of ISVs that performed
audits, the award was less than $100,000. The
enterprise survey corroborated this data.
• The vendors listed by enterprises as providing
audits within the last year included Microsoft,
Oracle, IBM, and SAP.
16

17. ENT- Tracking Usage
• Most customers track usage for compliance purposes, but
31% are tracking primarily to reduce shelf-ware
17
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Commercial
SAM
Manually,
including
spreadsheets
Homegrown
SAM
Vendor-provided
tool
Do not track
How Usage is Tracked, Satisfaction Level
Response (%) Satisfaction (%)
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93

18. ENT- Over/Under
18
0% 10% 20% 30% 40%
0%
1-10%
11-20%
21-30%
31-40%
41-50%
> 50%
Don't
Know
Over
Under
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93
Q: What % of software license spend within your organization do
you estimate is associated with applications that are:

19. Enterprises- Compliance Challenges
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
N/A
Very difficult
Difficult
No difficulty
19
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93
Q: For which types of software is it difficult to maintain compliance?
65%
tracking
via SAM

20. Enterprises and ISVs- Enforcement
0% 50% 100% 150% 200% 250%
ISVs
Enterprises
ISVs Enterprises
Network licensing 56.2% 47.9%
Product activation 48.3% 22.9%
Serial numbers checked
locally
28.1% 1.0%
Trust with audit 28.1% 15.6%
Dongle/USB 25.8% 0%
None 7.9% 0%
Vendor-supplied
automated-monitoring
mechanism with annual
true-up
7.9% 12.5%
Enforcement Preferences and Profiles
20
Source: 2011 Key Trends in Software Pricing & Licensing Survey, n=93

21. Software Industry Megatrend
21
5. 2012 Predictions
►Monetization models for Cloud will move to the forefront
 2012 will be a big year for private cloud services adoption and
deployment
 Public cloud services adoption will grow at over five times the rate of
overall IT spending
►Change will continue at rapid rate
 Even ISVs that indicate that current models are effective plan on
making changes to their licensing in the next two years
 Approaches will help ISVs and ENTs adapt to challenges in
managing/tracking license compliance, add options that respond for
customer preference for efficiency.
►Many things will stay the same….
 Concurrent user approaches
 Network licensing and product activation
 Caution around certain aspects of Cloud

22. Questions
22
1-617-202-9339
akonary@idc.com
Twitter: @mizkonary
Amy Konary
Research VP, Worldwide
Sofftware Licensing and
Provisioning Research
IDC
www.idc.com