Customer Centric View of Best Practices in Software Monetization

WIBU-SYSTEMS - Frost & Sullivan webinar: a customer centric view about best practices in software monetization
Oliver Winzenried
CEO
oliver.winzenried@wibu.com
Customer centric view of
best practices in software monetization
Welcome to our Webinar

Webinar Agenda
 Introduction of speakers
 Avni Rambhia, Senior Industry Analyst, Frost&Sullivan
 Ruediger Kuegler, Security Expert, Wibu-Systems
 Oliver Winzenried, Founder and CEO, Wibu-Systems
 Intro Wibu-Systems by Oliver Winzenried
 Solution Demonstration by Ruediger Kuegler
 F&S requirements analysis and conclusions
 Some use cases
 Q & A: Questions and Answers

1989... 2012: > 20 years WIBU-SYSTEMS
 Founded 1989 by Oliver Winzenried
and Marcellus Buchheit
 Privately held independent company
 Headquarters at Karlsruhe, Germany
 Subsidiaries in: USA, Netherlands, Belgium,
China, Spain, Portugal, United Kingdom
 Focus on Protection, Licensing and Security

Software Monetization: Maximizing revenues
Help customers to sell more.
Due to
 less product piracy
 increased target user groups
 flexible licensing

Challenges
Piracy
Reduction
IP
Protection
Production
Data
Features
on Demand
Access
Control
Integrity
Protection

The solution: CodeMeter Technology
CF-Card
CmCard/CF
SD-Card
CmCard/SD
USB
CmStick/C Basic
µSD-Card
CmCard/µSD
USB
CmStick
Link to the data sheets:
http://www.wibu.com/en/hardwarebasierter-kopierschutz.html
Intern
CmCard/I
Express-Card
CmCard/E
Activation
CmActLicense
PC-Card
CmCard
Chip
CmASIC

Thousands of Customers, Millions of Dongles

Wibu-Systems 2012
CodeMeter
Product Overview
Rüdiger Kügler
VP Sales | Security Expert
rk@wibu.com

Wibu-Systems 2012
Who takes part?
Vendor
• Software protection
• Software licensing
• Process integration
User
• Uses protected and
licensed software

Wibu-Systems 2012
LICENSE ACTIVATION
View of the User

Wibu-Systems 2012
 User gets his ticket
with order confirmation
delivery notice
 User starts software
and activates it
 Software is ready to use
 Activation via customer
portal
 Offline license file transfer
View of the User

Wibu-Systems 2012
1) User gets Order Confirmation

Wibu-Systems 2012
2) User starts Software

Wibu-Systems 2012
2) User starts Software II

Wibu-Systems 2012
2) User starts Software III

Wibu-Systems 2012
2) User starts Software IV

Wibu-Systems 2012
3) Software works

Wibu-Systems 2012
Transparent license management

Wibu-Systems 2012
OVERVIEW
View of the Vendor

Wibu-Systems 2012
CodeMeter for the Vendor
Technology
(CmDongle /
CmActLicenses)
Software Integration
Backoffice Integration
AxProtector
IxProtector
CodeMeter
License Central
Dongles:
CmDongle (USB, SD,
CF, µSD, …)
Softlicenses:
CodeMeter SmartBind®
License Models:
Single User, Trial,
Network, ….

Wibu-Systems 2012
CODEMETER TECHNOLOGY
View of the Vendor

Wibu-Systems 2012
Realizing license models
Single User License
Floating Network Licenses
Software Renting
Pay-Per-Use
Modular Licensing
Trial Licenses
Downgrade License
Software Assurance
High Availability Licenses
…
Text
License Quantity
Expiration Time
Usage Period
Unit Counter
Feature Map
Product Code
Maintainance Period
Customer Own License Information
…
LicenseModels
ProductItemOptions

Wibu-Systems 2012
Secure license storage
 CmActLicense
 State-Of-The-Art Binding to
hardware fingerprint of PC
 Dynamic fingerprint
 Tolerance level
 Trial license mode
 Extendable
 CmDongle
 Hardware with secure Smartcard chip
 Mobile usage
CmDongle
Software
CmActLicense
CodeMeter License Server

Wibu-Systems 2012
SmartBind®: Generation of Binding
HD ID
Mac
2
CPU
type
CPU ID TPM ID
Mac
1
…
HD ID
CPU
type
CPU ID
Mac
1
…
HD ID
CPU
type
CPU ID
Mac
1
… Redudancy Bits
Fingerprint Inventory List Redudancy Bits
Catalogue
Available Properties
Property Vector

Wibu-Systems 2012
Original Property VectorHD ID
CPU
type
CPU ID …
Mac
1
SmartBind®: Check of Binding (== OK)
HD ID
Mac
2
CPU
type
CPU ID TPM ID
Mac
1
…
HD ID
CPU
type
CPU ID
Mac
2
…
HD ID
CPU
type
CPU ID …
Fingerprint
Catalogue
Current Available Properties
Reconstructed Property Vector
Inventory List
Redundancy Bits

Wibu-Systems 2012
Original Property VectorHD ID
CPU
type
CPU ID
Mac
1
…
SmartBind®: Check of Binding (!= OK)
HD ID
Mac
2
CPU
type
CPU ID TPM ID
Mac
1
…
HD ID
Mac
2
…
HD ID …
Catalogue
Inventory List
Redundancy Bits
Remaining Gap
CPU
type
CPU
type
Different CPU ID
Current Available Properties

Wibu-Systems 2012
SOFTWARE INTEGRATION
View of the Vendor

Wibu-Systems 2012
Integration into the Software
 Automatic Protection
 AxProtector
 Windows 32-bit / 64-bit, Mac OS X, Linux .NET
Assemblies, Java J2SE and J2EE
 Software Protection API
 IxProtector
 Encryption of code parts
 Automatic implementation of cryptographic challenges
 CodeMeter Core API
 Additional functionality (Online Activation)

Wibu-Systems 2012
AxProtector = Wrapper
Why do I need
a wrapper?

Wibu-Systems 2012
Application with simple API calls
.Net (and Java) code can be
disassembled very easily

Wibu-Systems 2012
Hacker removes license check

Wibu-Systems 2012
Cracked application
License check
is removed

Wibu-Systems 2012
Application with obfuscation
Code still readable

Wibu-Systems 2012
AxProtector/IxProtector .Net
Compiled application Release version
Header
Code
Header
Stub Code
(without Intellectual
Properties)
AxEngine
(Security Engine)
Encryped Code
(original Code with
Intellectual Properties)
Ax/IxProtector
Definition
of licenses
and modules

Wibu-Systems 2012
Encrypted Code with AxProtector
Code is no longer
readable

Wibu-Systems 2012
BACK OFFICE INTEGRATION
View of the Vendor

Wibu-Systems 2012
Ticket /
Fingerprint
4
User
Online Activation Server
Vendor
Ticket
3
License
5
Ticket
2
SKU
1
Online Activation
Server

Wibu-Systems 2012
Backoffice Integration
Business
Logic
User Interface
License CentralERP
CRM
Webdepot
Gateway
Connector
eCommerce
(Digital River)
CRM
(Sales Force)
Activation
Wizard
Browser
Connector
Webserver
in DMZ
C
C
Database
Inhouse
Application
G
C

Wibu-Systems 2012
Activation via Internet (Online)
Vendor UserSOAP (XML), JSON,
HTTP Post
Ticket +
Fingerprint
License file
Receipt

Wibu-Systems 2012
UserVendor
Activation via File (Offline)


Wibu-Systems 2012 Page 35
Activation Wizard

Wibu-Systems 2012
License Portal

Wibu-Systems 2012
License Portal II

Wibu-Systems 2012
License Portal III

Wibu-Systems 2012
License Portal Customization

1
A Note to the Analyst
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Best Practices In Software Monetization – A
Customer Perspective
Avni Rambhia, Industry Manager
Digital Media Group
December 2012

2
Lecture Capture & Video Webcasting
Video
Enabled
Consumer
Devices
Broadcast &
Cinematography Cameras
Encoding & Transcoding
Acquisition DeliveryMiddleware and Workflow
Enterprise
Media and
Entertainment
Encoding & Transcoding
Digital Asset Management &
Enterprise Content
Management
MediaAsset
Management
Video &Ad
Insertion Servers
Nonlinear
Editing
IRDs
Online Video & Web
Analytics
Multi-Platform
Delivery &
CDNs
Multi-Platform
Delivery &
CDNs
Content Protection, Entitlement
& Rights Management
STORAGE
STORAGE
MarketingAutomationMarketing Process Optimization
Dynamic Publishing
Animation Software
Animation & CAE
Software
3D
Technologies
Video
Switchers
IP Video Network
Management
Online Video
Platforms &
Analytics
Enterprise Search
Pay TV
Platforms
Online Video Platforms
Digital
Signage
Content Protection, Entitlement
& Rights Management
Broadcast
Scheduling
Systems
Covering The Digital Media Value Chain
Source: Frost & Sullivan analysis.

3
Security
Entitlement Management
Monetization = Entitlement Management + Piracy Prevention
Entitlement Management is Necessary
• Define software SKUs, define and enforce licensing policies
• Back-office functions: license generation, tracking, transaction management and more
• Usability functions: transferring & upgrading licenses, auditing usage and more
• EM is the basic foundation upon which LM is built
Security is Hard, But Another Side of the Same Coin
• Rich EM routines are meaningless if they can be trivially bypassed or circumvented
• Enforcement implicitly assumes security
• Controlling digital software is hard; technology advancements favor hackers
• Keeping honest users honest often seems like a more reasonable target
• This is not a viable long-term monetization strategy; much lower ROI on LM investment

4
Losses from
piracy can
become
significant,
and they hurt
both software
vendors and
their
customers.
Source: Frost & Sullivan
China placed second in the world in the number of connections made to share unauthorized
copies of ESA members’ game products – accounting for more than 11.5% of the world’s
total..…Russia has not signaled a serious commitment to addressing piracy occurring through
the Internet, which has exploded [because there is] no legal framework for addressing online
piracy, coupled with steadily growing consumer access to broadband. - United States
Congressional International Anti-Piracy Caucus (IAPC)
[Competitors using pirated software undercut legitimate licensees on price, creating a negative feedback
loop.] If EDA industry doesn’t secure a level playing field for our customers, our industries will suffer
greatly – EDA Consortium
Losses From Piracy Are Real
In the industrial sector, 2 in 3 members of the VDMA (the German Engineering Federation)
have already experienced product piracy and/or counterfeiting.
All told, intellectual property theft costs U.S. businesses billions of dollars a year and robs
the nation of jobs and lost tax revenues. – U.S. Federal Bureau of Investigation (FBI)
Worldwide, 42 percent of software used in 2011 was unlicensed - Business Software Alliance

5
Key Market Trends in Software Monetization
• Keeping software monetized and keeping IP secure is a
harder challenge in international markets
• An issue for your customers, as much as for you
• License Management needs to keep pace
with evolving business models and product
architectures
• Analytics is increasingly important
• Installation complexity, run time cost and
performance impact are increasingly non-negotiable
• At the same time, security is also increasingly non-
negotiable
• This nudges LM towards being a first-class feature
rather than an afterthought
• Homegrown LM highly prevalent in the market today
• Fragmented platforms, multiple business models, cost control
pressures, need for security and speed of innovation necessitate
a formalized LM strategy
Market
Trends
Geographical
Expansion =
Piracy
Exposure
SaaS and
Hybrid Form
Factors
Complement
On-Premise
User Experience
Around License
Management Is
High Priority
Feature
Homegrown
LM is not
commercially
viable for most
ISVs
Peak activity
between now
and 2014
Peak activity
2014 to 2016

6
Considerations in Choosing an LM System

7
Vendor Profile: Wibu-Systems
Seamless
0
1
2 3
4
5
Scalable
0
1
2 3
4
5
Secure
0
1
2 3
4
5
• Seamless in development and deployment
• License Central can be quickly personalized, or
custom-built for ISV infrastructure/CRM system with
support from Wibu-Systems
• CodeMeter dongles move freely from computer to
computer or server to server
• Dongles are aesthetic branding opportunities
• Tolerance built into activation verification minimizes
false positives and disruption
• Scalable in terms of architecture and platforms
• CodeMeter dongles support number of interfaces
• Desktop, embedded and server platform support
• Wide range of licensing model support
• Protection process works the same way for
CmDongle and CmActLicense, so ISVs can use
either or both equivalently.
• Standardized encryption algorithms
• Company maintains an equivalent ongoing focus on
functionality and security
• Internal innovation driving improved hardware and
software locking and security technology
• External hacker challenges used regularly to test
and validate company products

8
Critical
License management systems, once deployed, are very hard to replace.
The process is deeply disruptive and extremely expensive. So choose
carefully the first time.
Urgent
Key
Start with a clear view of prioritized functional requirements and
business-appropriate security and cost targets. Then, choose a
license management solution that fits.
Essential
Basic
Crafting a License Management Strategy: Key Takeaways
Key takeaways for an ISV, in descending order
Ensure your chosen solution will scale with your business and evolve
with your product over time, and can also keep pace with expansion
and evolution of your customers.
Proactively craft a strategy and execute it with cross-team
involvement including technical and financial management,
marketing, engineering, testing and operations.
Security and piracy management is as important as entitlement
management in crafting a comprehensive license management
solution for your products and your business.

Customer Use Cases: Bosch Aftermarket
Software Monetization:
 Application for Aftermarket business
 Easy deployment is necessary for users
 Subscription based licensing
 CmActLicense at user side
 License Central for sales process integration

Customer Use Cases: Sirona
 IP protection
 High performance .NET protection
 Integrity protection (MPG)
 Increased market through flexible licensing
 License Central in sales process

Customer Use Cases: Wincor Nixdorf
 Protection against unauthorized use
 Access control for diagnostic functions
 Document encryption for manuals / service infos
 Fulfillment of PCI DSS requirements
 Automation of standard procedures
to make on site service more efficient

Q&A
Thank You
 Contact us for next steps:
Germany: +49-721-931720
USA: +1-425-7756900
China: +86-21-55661790
 www.wibu.com, info@wibu.com

Customer Centric View of Best Practices in Software Monetization

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