Software is not a new concept in embedded and hardware products. For years, devices have become increasingly intelligent, more programmable and more connected. What has changed today is that the trickle of product evolution has become a deluge of business revolution. Market-leading hardware manufacturers who have transformed into software businesses are finding the most success for themselves, while also driving success for their customers.
As examples, General Electric has pivoted its business to the Industrial Internet, while Rockwell Automation has firmly positioned itself as the Connected Enterprise company. Cisco Systems’ Cisco ONE software program marks a decisive shift in how its portfolio is packaged and monetized.
The paradigm of usage-based billing, initiated by the rise of the cloud and Software as a Service, is extending to all software and software-powered businesses. Stalwart vendors such as Adobe and Microsoft are at the visible forefront of the transition from perpetual licenses to subscription-based billing. The ripples reach deep within the industry; our research finds that three in four software publishers are already offering usage-based pricing options or are committed to adding this option. Figure 1 below shows the story in numbers for how the Internet of Things (IoT) paradigm and software revolution translate into increased investment and revenues for industries.
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