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Next Generation Pricing Strategies Vision, Challenges and Best Practices

Next Generation Pricing Strategies Vision, Challenges and Best Practices. Gareth Noyes Director, Corporate Operations Wind River Systems, Inc. What We Do: Device Software Optimization.

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Next Generation Pricing Strategies Vision, Challenges and Best Practices

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  1. Next Generation Pricing StrategiesVision, Challenges and Best Practices Gareth Noyes Director, Corporate Operations Wind River Systems, Inc.

  2. What We Do: Device Software Optimization Wind River enables companies to develop and run device software faster, better, at lower cost and more reliably.

  3. Customer Momentum Networking Industrial & Automotive Aerospace & Defense Digital Consumer • 37% • 20% • 24% • 19% BAE Systems Boeing EADS European Space Agency General Dynamics Harris Honeywell IAI KHI LG Innotek Lockheed Martin L3 NASA NEC Northrop Grumman Raytheon Thales Smiths Aerospace ABB Agilent Bosch Fanuc GE Hitachi Honeywell Mitsubishi National Instruments Omron Rockwell Automation Samsung Schneider Siemens Tektronix Tokyo Electron Yokogawa Alcatel BMW Canon Ericsson Fujitsu Hewlett-Packard Hitachi Honda Konica Minolta LG Electronics Matsushita Motorola Philips Pioneer Samsung Seiko Epson Sony Thomson Toshiba Alcatel Cisco EMC Ericsson Fujitsu Hitachi Hewlett-Packard Huawei Intel Juniper LG Electronics Lucent Marconi Motorola NEC Nokia Nortel Siemens 300 Million devices worldwide use Wind River technology

  4. Wind River Offering Circa 2002

  5. Challenges for Growth • PRODUCTS • “Chinese Menu”  commoditise value • SALES • Transactional, project-based approach • BUSINESS MODEL • Rigid: perpetual, project-based • Unpredictable, difficult to forecast • OPERATIONS • Transactional Horizontal, “One-size-fits-all”

  6. Our Response • Market-specific product offering • Focus on Enterprise-level standardisation • Expanded business model, licensing options • Subscription business model • Unique-User licensing option • Operational focus on ease of doing business • Assist customers with compliance • Entitlement varies over time

  7. Today: Wind River Business Model Choices Production License Options License Management Options Business Model Node-Locked PL-FREE Subscription Floating Quarterly in Arrears Unique User * Block Purchase Block Purchase Node-Locked Perpetual Per Unit Floating * Utility pricing, requires reporting

  8. Business Model Adoption • Launched November 2003 • FY05 revenue of $235.4 million • Revenue growth of 15% year-over-year • Record subscription revenue of $49 million—156% growth year-over-year • Deferred revenue balance of $77.1 million • Increase of 97% vs. ending FY 2004 balance

  9. Insights / Lessons Learned • Treat business model & licensing options as you would a product line • Roadmap, transitions, migration paths • Align pricing / licensing with value • Understand the implications • Revenue • Company-wide commitment • Change Management • Reporting trepidation • Operationalise business model: process integration • Many more licensing touch-points

  10. New Challenges: New Opportunities • A new business era • Compliance & controls • Open Source • Changes vendor value proposition • Community licensing terms • Innovation vs. standardisation • Accelerating software commoditisation • Open source & standards

  11. Operational best practice Overview of Wind River operations

  12. Licensing / Packaging Tenets • Installation / use to match business model • Make licensing transparent to developer • Restrict  enable & control • Make compliance easy • Self-service licensing cycle

  13. Product Installation Paradigm Developer 3 UPDATE Download patches, updates 1 INSTALL & DEVELOP Select either temporary or permanent Enter installation code (LAC) & user details Receive automatic 30-day license Up & Running Developer Desktop ESD 2 COMPLETE SETUP Migrate to license server when read Issued new license file: port@server Server Wind River 1 LICENSE SETUP Receives entitlement certificate w/ shipment Use PAWS to generate license files Communicate availability to installed developers Media Kit 2 3 ENTITLEMENT Redeploy licenses Manage renewals, upgrades COMPLIANCE Report usage System Administrator License Servers

  14. Developer: Installer Options

  15. View software entitlement Activate your products

  16. Customer Benefits • Reduction in licensing administration • Improved time to productivity for developers • Greater visibility / control over software deployment • Track and manage licenses • Measure compliance

  17. Insights / Lessons Learned • Standard ERP & CRM packages do poor job of managing intangibles • Entitlement = tangible x licensing • Customer role segmentation • OOB lifecycle analysis post shipment • Customer self-serve when they can • Gain greater insight into software deployment habits

  18. Next Generation Pricing StrategiesVision, Challenges and Best Practices

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