A Brief History of License Management (part 4)

History of License Management: The Market Matures (2000-)

By the year 2000, all the original players who had experienced reasonable success in the License Management business (GLOBEtrotter, Elan, and Wyatt River) had been absorbed by public companies. By this time, the FLEXlm product was the clear winner with over 80 or 90% market share.

The next several years were marked by a slowdown in innovation as the original entrepreneurs who had defined the market and developed these products were replaced with larger development teams and more of a “management by committee” process in the larger companies.

In my view, innovation slowed down for 3 reasons: first, the early period of rapid product development and customer acquisition had passed; second, the people who enjoyed working with the product and the market were gone, and finally, while the early market was dominated by private companies who were focused on the product and their customers, after 2000 this changed to public companies who were focused on their shareholders and quarterly revenue and profit.

By the end of 2005, many ISVs and end-users had grown tired of having no real choice for a license management solution. By starting Reprise we gave them another choice and we believe that the resulting competition will make innovation move a bit faster.

One comment

  1. John Rice says:

    Christiano’s history of software license management by is very well done but it understates the role of anti-piracy in the early years. Initially (in the 1970s & 80s), customers would (casually) make “extra” copies of software tools. Sometimes this was to save money, other times this was just to expedite internal operations as it could take weeks to buy another license. When I first looked into this field in the mid 1990s, anti-piracy was a clear motivation and part of the “sales pitch” for software license management tools. Unfortunately, the protection provided by these tools then was very weak.
    Here is my experience: I took on a very bright undergraduate to study software security in a reading course. We started by evaluating currently available anti-piracy tools. The evaluation for the first tool (chosen from one of the companies mentioned by Christiano) was as follows:
    • It took me four weeks to buy the software through the university business office.
    • It took the student 2 hours to learn how to install, use and apply the software.
    • It took the student two more hours to discover how to defeat its protection.
    He had similar experiences with other anti-piracy tools available then.

    License management has two aspects:
    (i) Managing the licenses, e.g. distributing them in the company, buying more if needed, returning unneeded licenses, etc.
    (ii) Preventing the unlicensed use of software – or billing the customer for such use.
    The first aspect is much more complex than it appears at first glance; one can see that by studying the current system from, say, Macrovision. One can interpret the second aspect as tamperproofing the license management system. Early software tamperproofing methods were very weak (as indicated above). But the state of the art of tamperproofing has progressed greatly in the past decade and now one can make tampering with a program very difficult even for a professional hacker. There is no reliable data on the extent of unlicensed use (piracy) of software but one indication is that the US Dept. of Justice convicted people in 2006 for piracy of software with an estimated value of perhaps $250,000,000. See http://www.usdoj.gov/criminal/cybercrime for details. It is unlikely that that more than 5% of the criminals were convicted and it is likely that the DoJ overestimated the value of the software involved. So one can conjecture that the value of pirated software sold could be as high as $2-3 billion each year (this does not include pirated music or movies). Thus piracy causes a very large loss of business for software companies.

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