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Software Licensing Case Study – Driving Sales and Service with Software License Management

SL.TV Editor — Wed, 02 Jun 2010 14:11:55 +0000

Its easy to think of software licensing and copy protection as little more than “insurance”: a part of the business that is necessary to protect against misfortune – but doesn’t really add much to the bottom line when things are running smoothly.

This case study shows how one company has gone beyond this basic approach and leveraged it’s software license management drive both sales and customer service.

Linnsoft make market analysis software for traders and active investors.

Like many start-up ISV’s Linnsoft initially opted to develop their own licensing solution. Founder Bill Linn explains:

Like many ISV’s in the early days we decided to develop our own solution. I have a Ph.D. in computer science, so I dusted off my cryptography books, picked the brains of a few ex-classmates who had gone on to specialize in the field and came up with a solution that was good enough for us at the time. Our software is an analysis tool and our customers will also have a subscription to a data service, with a unique password, so we piggy-backed our copy protection on to that password. This worked well enough for us for a time.

But as the company grew Linnsoft needed more from their licensing and copy protection: they became a target for piracy, and they wanted to boost sales by offering subscription licensing.

This case study shows how they addressed these issues and went on to use their software licensing management solution to drive sales and enhance customer service.

Read the full software licensing case study here.

Microsoft Loses Hope in China

SL.TV Editor — Fri, 28 May 2010 07:42:41 +0000

Microsoft CEO Steve Balmer said this week that though around 20% of the world’s computers will be bought in China this year, China will probably account for only 1% of Microsoft revenue.

This, Balmer says, is due to the extremely low level of Intellectual property protection in China, which he says means that Microsoft and other US companies “have a hard time getting paid for their work” in China.

Bloomberg Businessweek reports on an interview with Balmer, who says:

“There are two things that make a country interesting. One is it buys a lot of PCs, the other is they pay for the software that gets used on those PCs. In China, there is no software market to speak of.”

Despite 20 years of lobbying from overseas firms Intellectual Property protection in China remains minimal, whilst at the same time trade regulation has greatly increased, making it more complex for overseas companies to trade in China.

The lack of intellectual property protection in China impacts on other key US industries, such as the pharma and film industries and likely accounts for a good portion of the US trade deficit to China which was over $16 billion in March 2010 alone.

Software Piracy in China has nearly doubled in the past 4 years, and commentators remark that perhaps China would show more enthusiasm for strengthening their anti-piracy laws if they had a software manufacturing industry themselves.

Balmer, whilst not dismissing China as a market, sees more hope in other emerging markets, like India and Indonesia.

Though India has a far smaller economy than China, it offers more potential for Microsoft, Balmer says:

“India is not perfect but the intellectual property protection in India is far, far better than it would be in China,”

Will this stand from Microsoft move the Chinese government? Probably not.

And sadly, though Microsoft may choose to scale back its engagement with China, there is little likelihood that the Chinese software piracy industry will scale back its involvement with Microsoft who are likely to remain a key target for Chinese software pirates, cannibalizing legitimate sales both in China and around the world.

Software Licensing Case Study: when it’s time to say goodbye to “home made” copy protection.

SL.TV Editor — Tue, 25 May 2010 10:48:21 +0000

Avistar is a leader in the desktop visual communications market. The company was founded over 15 years ago, offering a proprietary hardware based video conferencing solution and specializing in the financial services market.

Responding to feedback from clients Avistar took the decision to move to a software-only, desktop visual communications system, which would be easier for clients to roll out across the enterprise, and more cost effective. Avistar and now leaders in their market and have expanded their client base beyond the financial services sector in to provide visual communications solutions to enterprise and SMB clients in a wide range of vertical markets.

In the days when Avistar offered a proprietary hardware based system they protected their software with a solution which had been built in house. The software activation process under this system was a little “clunky” for the end user, and the copy protection worked on an “honour” basis.

Moving forward into a software-only environment Avistar’s product development team were clear that they needed:

Iron-clad copy protection
A licensing solution embedded within the software, which would deliver a seamless end-user activation experience.
Ease of deployment

With the in-house development team working flat out on the new software product it was clear that even attempting to develop the existing “in-house” licensing system was not going to be an option.

Avistar also recognised that now their whole business was to be based around their software offering they needed to draw on the experience of licensing experts to give their software the protection and licensing professionalism it deserved.

Read the full software licensing case study here.

Will you ride the Media Tablet Rollercoaster?

SL.TV Editor — Mon, 24 May 2010 07:02:19 +0000

In a new report out this month the IDC examines that market for the “media tablet” and claims that the this new category of device will quickly become a consumer “must have” gadget. The report (and early strong sales of the Ipad), runs contrary to the views of many early commentators who failed to see the point of the media tablet: viewing it as an imperfect “halfway house” between smartphone and laptop.

Though the media tablet is very much an emerging category with the Apple ipad as the current prime example, IDC predicts that 7.6 million media tablets will be shipped this year, rising to 46 million in 2014.

The IDC defines media tablets as:

“tablet form factor devices with 7-12in. color displays. They are currently based on ARM processors and run lightweight operating systems such as Apple’s iPhone OS and Google’s Android OS. This distinguishes them from tablet PCs, which are based on x86 processors and run full PC operating systems. Media tablets do not include built-in hardware keyboards but use a stylus/pen or finger for navigation and data input. They provide a broad range of applications and connectivity, differentiating them from primarily single-function devices such as ereaders.”

Though media tablets will primarily be marketed as entertainment devices productivity applications will quickly become available to meet enterprise demand.

IDC says that consumer demand for media tablets will be strongly driven by the availability of apps unique to the media tablet, which will differentiate the experience from that of using a smartphone or PC. They believe that as more media tablet optimised apps emerge the media tablet will move from being a consumer “nice to have” to being an essential for many people.

So if the IDC are correct there is a huge new market emerging here for software developers.

Apple’s attitude to developer licensing has ruffled many feathers in the developer community, and the latest edict prohibiting use of cross compilers is a good example of the kind of thing many members of the developer comunity don’t like.

But with a market this big emerging it seems likely many developers will learn to live with their reservations and toe the Apple line in order to take advantage of the upcoming bonanza.

Software License Agreements in your Business: do you have a clear picture?

SL.TV Editor — Tue, 18 May 2010 07:34:22 +0000

Most organizations probably think they have a pretty good handle on what software license agreements they have signed up to, but closer inspection may reveal significant gaps in corporate knowledge of what software licensing terms and conditions have been agreed to and what impacts these may have on the business.

Software License Agreements can be pretty complex at the best of times – Microsoft’s are so complex they run a course on them.

But when it comes to open source software there can be a tendency to overlook the license altogether.

Many people think of a software license agreement as a document which sets out exactly what you are getting for your money when you buy a license for a piece of software. So self interest will often drive us to look a little more closely at the fine print.

But when you use a piece of software that you don’t have to pay for there is little motivation to read the detail of the agreement.

Open Source is specifically designed for ease of access – one click and your away. But although Open Source is easy to access it is someone’s intellectual property, still protected by copyright and you are still using the software under the terms of a license, which will have certain limitations and impose certain obligations on the user.

Within corporations there are generally 2 controls over the deployment of software. Firstly the IT department which may control installations and secondly the purchasing process which may require authorisation for software purchase.

Since there is no payment for open source software one of those control mechanisms does not apply – so can you really be sure that the licensing for all software running in your business has been properly scrutinized and is being adhered to?

So what are the potential implications and repercussions here? Well not a lot you may think. But think of this: say your in house developers have grabbed an open source component – without fully understanding the licensing - and integrated it into one of your line-of-business applications. Then suppose you are asked to stop using that component. Could be some nasty repercussions there I think.

Phil Odence takes the argument to another level and asks whether you know what components are used in the Commercial Software deployed within your organization. What implications will there be for you if your vendor has breached the terms of their license agreement?

As organizations show an increasing tendency to “do the right thing” in terms of software licensing, now may be the time to take a closer look at the use of open source within your organization.

Software License Revenues Roar Back in Q1

SL.TV Editor — Mon, 10 May 2010 10:35:48 +0000

An interesting post by Forrester’s Andrew Bartels offers 2 very encouraging messages for those involved in publishing licensed software.

Firstly, Bartels reports the recovery of licensed software revenues in QT. SAP has reported an increase of 18% in USD$ revenues, Oracle 13% with even higher figures seen elsewhere.

Licensed software, which is treated as capital expenditure, was hit hard by the global recession and it’s a relief to see the market recovering so strongly and so swiftly.

But Bartels thinks there is more at work here than just economic recovery. He believes that the onward march of SaaS may not be moving quite as rapidly as we had been led to expect.

Bartels says that in Forrester surveys corporates repeatedly site 5 key reasons why they are still not moving to SaaS.

inability to customize;
difficulty in integration to other systems;
security of data and information;
worries about pricing models that put clients on a constantly rising escalator; and
lack of SaaS products.

Though vendors are making progress in many of these areas there is stall a long way to go. But Bartels thinks that in developing economies, which will deliver much of the growth in software licensing revenues in the coming years, there may be still greater barriers to SaaS adoption, in the form of deeper concerns about security, and issues around internet connectivity and power supply which we discussed in a previous article on cloud computing.

Forrester offer more analysis on the subject at their IT Forum 2010 in Las Vegas later this month. The “Sourcing Strategies For The Business-Technology-Focused Enterprise” track, which includes a session titled: Noughty Software Licensing — Is The Obituary Premature? – could be of particular interest.

The message overall seems to be that for software publishers it’s a little too early to be putting all of your eggs in the SaaS basket.

Software Licensing Triple Challenge: Case Study

SL.TV Editor — Thu, 06 May 2010 08:02:03 +0000

This case study shows how NIK Software dealt with 3 key software licensing challenges, which many ISV’s will recognise.

NIK Software Inc is a privately held US company that develops software solutions for the growing digital imaging and photography markets. Established in 1995 the company has become a recognised market leader in digital filter development. Customers including leading design and photography professionals, as well as pro-am users and design and photography schools and colleges world wide. The company’s products use a range of innovative technologies that make digital imaging and photography easier and more powerful. Nik is headquartered in the US with branch offices in Germany. Their software has won a range of industry awards both in the US and Europe.

With a customer base which includes large numbers of students and hobbyists. challenge #1 for NIK is casual software piracy and license over use. Whilst they need to protect revenue they also realise that they need to deal sensitively with this segment of their users as they understand that today’s student could easily be tomorrows ideal customer. So they needed software license management systems that would allow then to identify license overuse and respond to it appropriately.

Challenge #2 for NIK were their plans to expand their operation into the Asian market. Which software piracy running at around 90% in some Asian countries NIK new that they needed very robust copy protection.

The final challenge for NIK was that their customer base is split 50/50 between Mac and Microsoft users, so they needed a software license management solution that works accross both problems.

This case study explains how Nalpeiron’s Software Licensing Solution helped NIK to meet these challenges.

Read the case study here.

Free Webinar: Turning Software Pirates into Paying Customers

SL.TV Editor — Wed, 05 May 2010 15:37:21 +0000

At first glance the idea of converting software pirates into paying customers may seem an unlikely proposition, but this webinar explains how, for many big names in the software industry, this makes a significant contribution to the bottom line.

The webinar focuses on identifying end users of pirated software and developing strategies for recovering revenue from them. It provides some fascinating insights along with plenty of food for thought and ideas that will be actionable in any software business.

The speakers are Victor DeMarines of V.i.labs and Chris Luijten, founder and CEO of ITCA. Both have considerable expertise in the area of anti piracy strategy.

The starting premise of the webinar is that there is little point trying to identify who is cracking your software, or what channels are being used to distribute pirated software, as removing a current offender in either of these two categories will only result in another springing up moments later.

Instead software publishers should focus on identifying organisations which are illegally using cracked copies of their software. DeMarines and Luijten explain the different approaches that their companies take to this area and both offer some interesting insights and ideas.

Identifying where pirated software is being used not only offers an opportunity to recover revenue from organizations who are using the software illegally, but can also reveal patterns of usage which may suggest potential new markets.

There is a good discussion on qualifying software piracy leads: deciding which organisations are actually likely to yield a financial reward if targeted.

The next step is taking action on qualified software piracy leads to recover lost revenue. Luijten explains the different methods of approach that his consultancy uses and what works best with different types of organisation, in different situations, and in different parts of the world.

It’s a fascinating listen with some interesting asides. Both DeMarines and Luijten say clients generate around 30% of annual new business revenue from piracy conversions – a statistic which has to give any software publisher pause for thought.

Click here for to listen to the webinar.

Software Piracy Costs Nintendo 50% of European Sales Revenue

SL.TV Editor — Fri, 30 Apr 2010 07:32:19 +0000

Nintendo has recently reported that games sales in Europe have fallen by c50% due to increased use of so called “Magicom” devices.

These devices are typically around the same size as a traditional games cartridge with a separate memory card to store downloaded software. The device allows users to download pirated software and use it on games consoles.

Usage of these devices is spreading rapidly. Units currently retail at around $80 USD for the device and a bundle of around 12 pirated games.

Whilst the devices originally worked to break the copy protection on hand held consoles like the Nintendo DS new versions are now becoming available that enable the use of pirated software for larger consoles like the Nintendo Wii and Sony PlayStation.

Interestingly. though use of these copy protection cracking devices started in Japan the drop in sales reported by Nintendo there has been only 7% compared to 11% in the US and around 50% in Europe.

According to reports on asahi.com Nintendo monitored downloads from 10 websites in June 2009 and found that pirated copies of their software had been downloaded 238 million times. Multiply this figure by the average cost of a legitimately purchased game and this equates of over $10 billion in lost sales.

Now we have previously discussed the problems with assuming that a pirated purchase equates to a lost legitimate sale, but by any measure this is a huge problem. For an industry where hardware development costs have always been heavily subsidized by software sales, software piracy on this scale is potentially devastating.

Nintendo says it is focusing its attention on developing consoles that will not play the pirated software and governments around the world are cracking down on the websites involved in selling the pirated software.

However whilst there is such a huge willingness amongst gamers to participate in this criminal activity it is likely that the software pirates will find a way to meet the market demand. It is probably only when gamers realize that they are cutting off the lifeblood of the industry that makes their hobby possible that we will see an improvement in the situation.

Chinese Software Pirates to Appeal Microsoft Verdict

SL.TV Editor — Thu, 29 Apr 2010 06:11:08 +0000

In a new development in the story we reported earlier in the week on Microsoft’s record breaking software piracy compensation win it now appears that Dazhong Insurance may be putting in an appeal.

China’s Dazhong Insurance has said it will appeal the Chinese courts decision to force it to pay $317,900 compensation to Microsoft.

Dazhong was found to have been using more than 400 seats of 9 pirated software programs including Office and Windows.

Dazhong is basing it’s appeal on the ground that Microsoft’s software pricing (which it has used to calculate its compensation claim) are inflated, because Microsoft holds a market monopoly.

Good luck with that Dazhong – sounds remarkably like clutching at straws to us. We await developments with interest and hope the Chinese courts will stick to their guns.