Macrovision Expands Software Licensing Platform - SoftSummit

Macrovision Expands Software Licensing Platform
October 7, 2003
By Mark Hachman
SAN JOSE, Calif.—Macrovision Corp. launched the next iteration of its software licensing platform,
promising that software publishers will have the freedom to select from multiple business models
including utility pricing.
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Macrovision's launch of its new FlexNet
platform formed the centerpiece of Monday's
SoftSummit e-licensing show here.
Macrovision will launch FlexNet with a variety
of partners, including Intel Corp.,
OpenChannel Solutions, InstallShield, Tally,
Element 5 and IntraWave, according to Dan
Stickel, executive vice president and general
manager of the software technologies group
at Macrovision.
While Macrovision has maintained a relatively
low profile, the company claims to be the
leader in electronic licensing, counting 2,500
customers to date.
on Software Industry."
Read "E-Licensing Making an Impact
Although consumers have strongly resisted any sort of e-licensing or digital rights management
solution, Stickel attempted to position FlexNet as an ideal solution for software publishers and IT
managers alike.
Publishers can design and deploy new software without the "revenue leaks" associated with piracy,
Stickel said. From an IT perspective, companies can stop worrying about compliance.
"As soon as new software gets purchased, there are often immediate changes, such as downsizing or
new hires," Stickel said. "No one remembers exactly how to use [the software], and the last thing a
poor IT manager wants to do is look at a 60-page contract."
FlexNet will be deployed in three packages: FlexNet Manager, for management of e-licenses, which will
enter beta this December; FlexNet Publisher, for software developers, which will ship in final form in
January; and FlexNet Connector, tools to connect the published software to the licensing mechanisms,
which will ship sometime in 2004. FlexNet Publisher will be an automatic upgrade to Macrovision's
existing "Flex lm" platform, although the company will charge for some of the premium offerings of
FlexNet, including utility pricing.

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FlexNet was designed to be as flexible as possible, and customers will be able to deploy the software on
as many as 25 different operating system platforms, including handheld operating systems, Stickel
said.
However, the company is touting "utility pricing" as the software's most useful upgrade, a feature being
beta tested by many of the company's customers. Software publishers will be able to charge users for
how much they actually use the software, instead of charging them a fixed per-seat license, Stickel
said. The licensing certificate will connect to a back-office server at Macrovision and communicate how
much the software has been used, so that customers can be charged appropriately.
Next page: Mixing and matching business models.
Publishers will have the option to mix and match business models, as well. For example, a software
publisher may choose to provide a customer with a 100-seat license with the ability to shift into a
utility-based "overdraft" model during a critical programming period, where additional users could be
accommodated, Stickel said.
On the flip side, IT managers will benefit from being charged exactly how much their user base uses the
software, Stickel said. For example, customers are often unable to connect to hosted applications such
as Salesforce.com through some client-side problem, such as routine maintenance or a network outage.
The FlexNet software will also have the ability to allow limited feature-level pricing, where publishers
will have the ability to charge for additional features—or where IT managers will be able to purchase
only the features they actually use.
That may create some sticker shock, Stickel acknowledged, as customers work out new estimates of
what software they will actually use.
On the other hand, Jacqueline Woods, vice president for global licensing and strategy at Oracle Corp.,
said that her economics background had proven that utility pricing only works in specialized cases.
For example, cable television is considered to be a utility, although a customer can watch 1 minute or
100 hours per month and be billed the same price. A true "utility model" is based on the electric
company, which uses a "lights-on, lights-off" model to regulate customers.
"In terms of my economic background, I've found that customers end up paying more money," Woods
said, and that the typical per-unit cost actually goes up.
Instead, Woods said, customers will probably opt for something like an 80-20 split favoring traditional
"perpetual" licenses to software, with the utility model kicking in under specialized conditions, such as
the crunch right before a deadline.
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