Zentitle IoT and Hardware

Nalpeiron's Zentitle platform caters to a wide variety of different types of software vendors. And one of the real trends that we've seen over the last five plus years is hardware vendors starting to really embrace software monetization approaches. So let's look at that.

So back in, say, 2010 time frame, we saw hardware companies doing a really focus on differentiating through hardware. Right? So they would think of themselves as a hardware company. They would create hardware devices They would ship hardware devices, and the software was strictly a means to an end to provide the overall solution, the overall functionality.

But then what happened typically around twenty fifteen or so. We started to see hardware vendors really doubled down on software. You know, kind of back to that old comment from Mark Anderson of software is eating the world. Hardware companies started to realize, Hey, we need to differentiate shape more and more through software. Started hiring more and more software engineers, and software became a much bigger expense for them as an organization.

And therefore, they wanted to be able to monetize that. So that's when they started realizing that access to firmware updates, new capabilities and such was becoming really important.

We'll move forward to today in the twenty twenty to twenty twenty five range.

And now hardware companies have really started to pivot to focus primarily on the software that they provide with hardware being a means to an end to appropriately run the software that they write with you the appropriate deployment characteristics and so forth. And so there, you're really starting to see software monetization techniques come in full play. So let's look at some of those techniques.

So one of the main things that hardware companies really appreciate being able to do through software monetization is to do what we call feature based licensing.

And what feature based licensing does is to allow a vendor to sell a device, sell a piece of software and turn individual capabilities on and off through that software license. So the actual application, the hardware device exactly the same. So if they previously had multiple SKUs, multiple devices with different capabilities, they can now consolidate that onto a single platform.

And be able to differentiate different tiers of capabilities strictly through licensing.

So for example, they might have different features, perhaps, you know, for a base edition, only feature one is enabled.

And then with upsells, you can add on these additional capabilities.

So for various devices might be adding on additional codecs, or additional protocols that are supported and so forth.

Another capability that hardware vendors really leverage within the licensing world or what we would call capacity, based licensing.

Where there is some metric, some parameter that their software and their device makes use of in order to differentiate one here from another.

Classic example here would be, let's say, you have a base station for a sound system.

And on the physical device, you have sixteen ports. Right? So you've got the ability to physically plug in sixteen ports.

But perhaps you wanna have an entry level where there are only four ports enabled. So through licensing, you can say, okay. Initially, we're gonna sell the device. It'll come from the the, manufacturing floor with set up for four channels.

And then in the field, the and customer can purchase an upgrade and unlock the another twelve channels to access the full sixteen channels that that hardware is capable of. And we're seeing this in other fields as well. So for example, I'll think about tesla, where they can arbitrarily through software limit the capacity of a given battery so they can sell at a lower price point, a lower capacity, a lower range car, and then through a software upgrade, simply unlock that additional capacity. Similarly with things like ludicrous mode or other performance modes.

BMW is doing this as well. So many car companies are now using licensing as a way of unlocking additional value add functionality.

The other thing that companies are starting to leverage is even time based licensing.

So they may have a core set of features, built into the hardware. So you've got some sort of perpetual, non expiring set of capabilities as part of the base, capabilities of the platform. But layer on to that a subscription for additional information, additional capabilities, additional services, and such. So it may be a subscription for connectivity, a subscription for, ongoing updates, a subscription for access to data, so the subscription model is really important for hardware companies because now they've taken something from a one time purchase into something that is now generating an ongoing and predictable revenue stream. And of course, that really helps these hardware companies make that migration to a software based business where their ongoing software expenses are also ongoing.

So by layering in subscription based services on top of the hardware, hardware companies are now generating brand new predictable revenue streams.

So that's some of how IoT and embedded device, hardware companies are leveraging entitlement management We look forward to talking to you and your team about how we can help you.