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IoT Creates Challenges and Opportunity for Network Monetization

January 26, 2017

The Internet of Things (IoT) is becoming much more clearly defined in 2017, as more devices are embedded with intelligent software and as networks mature to become more autonomous and efficient. This climate of change creates massive opportunities for vendors and developers but also presents some challenges when it comes to managing and monetizing on new types of software.

The IoT is changing the technology value chain, shifting emphasis away from hardware and devices to software and services. Device manufacturers are also offering their hardware as platforms, opening up APIs for third-party applications. A recent article from Flexera Software, which specializes in software monetization in a changing technology landscape, penned for vmblog.com, discusses how the IoT will impact software monetization this year and beyond.

First off, network functions virtualization (NFV) is becoming an entrenched part of the telecom industry, indicating a massive shift toward software-centric networking and virtualization. That means that network operators and service providers are going to need to offer more flexible and elastic service models to accommodate shifting enterprise bandwidth demand. The push will be toward subscription and as-a-service models for monetization.

This shift toward usage and consumption-based pricing will change licensing, and network equipment providers are going to need to break down and monetize different layers of the NFV stack, or risk losing out to more elastic and nimble competitors. Open source software (OSS) is also complicating matters, creating new licensing and security challenges for most businesses working in the NFV and SDN space.

Flexera has outlined several important considerations for network equipment providers transitioning to the age of IoT and NFV. In order to stay competitive and properly monetize their offerings, businesses need to manage complexity and offer flexible models for monetization. They also need to monetize their platforms and open them up to third-party apps to glean the most value out of their investments.

Networking companies should also develop new pricing strategies for their software, being mindful to monetize it effectively throughout the entire application lifecycle. They should also try to capitalize on software maintenance by offering customers structured maintenance packages and by helping to manage entitlements according to those packages. Networking vendors can also actively orchestrate the physical and digital supply chain throughout multi-level distribution networks to get the most value out of their offerings. And finally, companies should protect their software intellectual property and manage open source use, compliance and security to ensure their offerings are being properly monetized.

By being mindful of all the components and peripherals involved with the IoT and the general push toward digital transformation, network equipment vendors can ensure they are properly monetizing their solutions, throughout all layers of the network stack.

Edited by Maurice Nagle
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