Manufacturing product strategists can boost revenue potential by shifting product value from device hardware to the software running on the device and applying an appropriate licensing strategy.
Laurie Wurster, research director at Gartner says, “We expect that by 2020, a failure to put in place a LEM system will result in a 20 percent drop in potential revenue generated from software for device manufacturers connecting to the IoT.”
Most of these companies are first-time software providers that can now construct their software as well as the devices via the IoT, which represents an important market opportunity to drive business transformation.
“By controlling product functionality and the features and capacities of Internet-connected devices via flexible licensing, device manufacturers will be better able to compete in current and new markets,” said Wurster.
Wurster believes that as the need to scale and react quickly to changing market conditions increases, manufacturers may eventually start to purchase packaged solutions. Providers of commercial products investing in support for new licensing models and broadening their set of capabilities make these solutions an “attractive alternative” for the manufacturers that don't want to manage in-house LEM software.