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 WinzenriedCEO

[email protected]

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 Winzenriedand 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

PiracyReduction

IPProtection

ProductionData

Features on Demand

AccessControl

IntegrityProtection


The solution: CodeMeter Technology

CF-CardCmCard/CF

SD-CardCmCard/SD

USBCmStick/C Basic

µSD-CardCmCard/µSD

USBCmStick

Link to the data sheets:http://www.wibu.com/en/hardwarebasierter-kopierschutz.html

InternCmCard/I

Express-CardCmCard/E

ActivationCmActLicense

PC-CardCmCard

ChipCmASIC

http://www.wibu.com/en/hardwarebasierter-kopierschutz.html


Thousands of Customers, Millions of Dongles

Wibu-Systems 2012

CodeMeter

Product Overview

Rüdiger KüglerVP Sales | Security Expert

[email protected]

Wibu-Systems 2012

Who takes part?

Vendor

• Software protection• Software licensing• Process integration

User

• Uses protected andlicensed software

Wibu-Systems 2012

LICENSE ACTIVATIONView of the User

Wibu-Systems 2012

User gets his ticketwith order confirmationdelivery notice

User starts softwareand 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

OVERVIEWView of the Vendor

Wibu-Systems 2012

CodeMeter for the Vendor

Technology(CmDongle /

CmActLicenses)

Software Integration

Backoffice Integration

AxProtectorIxProtector

CodeMeterLicense Central

Dongles:CmDongle (USB, SD,

CF, µSD, …)

Softlicenses:CodeMeter SmartBind®

License Models:Single User, Trial,

Network, ….

Wibu-Systems 2012

CODEMETER TECHNOLOGYView 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

…

Licen

se M

odels

Prod

uct It

em O

ption

s

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 IDMac

1 …

HD ID CPU type CPU IDMac

1 …


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


1 …


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 IDMac

1 …

SmartBind®: Check of Binding (!= OK)

HD ID Mac 2


1 …

HD ID Mac 2 …

HD ID …

Catalogue

Inventory List

Redundancy BitsRemaining Gap

CPU type

CPU type

Different CPU ID

Current Available Properties

Wibu-Systems 2012

SOFTWARE INTEGRATIONView 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 needa 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 checkis 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

Definitionof licenses

and modules

Wibu-Systems 2012

Encrypted Code with AxProtector

Code is no longer readable

Wibu-Systems 2012

BACK OFFICE INTEGRATIONView of the Vendor

Wibu-Systems 2012

Ticket /Fingerprint

4

Use

r

Online Activation ServerVe

ndor

Ticket3

License5

Ticket2

SKU1

Online ActivationServer

Wibu-Systems 2012

Backoffice Integration

BusinessLogic

User Interface

License CentralERP

CRM

Webdepot

Gateway

Connector eCommerce(Digital River)

CRM(Sales Force)

ActivationWizard

Browser

Connector

Webserverin DMZ

C

C

Database

InhouseApplication

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

This template is designed to allow a new Frost & Sullivan analyst to create a high quality deliverable that meets or exceeds the standards expected by our clients. At the same time, it is not designed to inhibit more experienced analysts in creating additional valuable content. The minimum requirements for all ME studies completed in PowerPoint are contained in this template. Analysts are encouraged to go beyond these required slides and provide additional information if clearly adding value for clients. In creating new slides, remember that literally, one picture is worth one thousand words—choose graphics over text whenever possible and use the PPT TimeSaver 2.0 to ensure consistent, high quality look and feel. Analysts are not to change the order of or delete slides/sections, unless clearly not relevant to the topic under study—such deletions or changes must be justified to both the Strategic Review Committee (SRC) and assigned editor. Text contained should never be less than 14 pitch Arial font except where otherwise noted, in footnotes, or chart/graph labels. PPT charts should use the “beveled” style shown herein (called “Style 26” in Office). No text or graphics should extend into the border of a slide. Red font in this template is used ONLY to provide instructions or indicate where variable text should be inserted; generally red font should not be used in the text of final deliverables, except for extreme emphasis. Slide titles must be less than 300 characters to properly upload onto Frost.com. Hyperlinks will work in PPT when in presentation mode and when put into PDF format. Finally, suggestions for improvement are encouraged; please provide them to: [email protected] and [email protected].

Best Practices In Software Monetization – A Customer Perspective

Avni Rambhia, Industry ManagerDigital Media Group

December 2012

mailto:[email protected]


2

Lecture Capture & Video Webcasting

Video Enabled

Consumer Devices

Broadcast & Cinematography Cameras

Encoding & Transcoding

Acquisition DeliveryMiddleware and WorkflowEnterprise

Media and Entertainment

Encoding & Transcoding

Digital Asset Management & Enterprise Content

Management

Media Asset 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

Marketing AutomationMarketing Process Optimization

Dynamic Publishing

Animation Software

Animation & CAE Software

3D TechnologiesVideo

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

Software Monetization: IP protection High performance .NET protection Integrity protection (MPG) Increased market through flexible licensing License Central in sales process


Customer Use Cases: Wincor Nixdorf

Software Monetization: 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: +49-721-931720USA: +1-425-7756900China: +86-21-55661790

www.wibu.com, [email protected]

http://www.wibu.com/
