1. SOFTWARE VALUE MANAGEMENT Dan Stickel EVP & General Manager Software Technologies Group Macrovision

2. Slide 2The Standard in Software Licensing & Installation AGENDA Software Pricing & Licensing Study Software Value Management Case Studies How Do You Rate?

3. Slide 3The Standard in Software Licensing & Installation MACROVISION BACKGROUND Digital product value management (software, movies, music) NASDAQ: MVSN; $170M+ estimated 2004 revenues 500 million desktops; 70,000 customers; $85B+ software protected 700+ patents worldwide in licensing & DRM IDC names Macrovision “clearly the leader” in licensing Worldwide support & professional services

4. Slide 4The Standard in Software Licensing & Installation SIIA BACKGROUND The Software & Information Industry Association (SIIA) Principal trade association for software and digital content industry Global services in government relations, business development, corporate education and intellectual property protection More than 600 leading software and information companies

5. Slide 5The Standard in Software Licensing & Installation METHODOLOGY & SAMPLE 100 Enterprises – Typical titles were CTO, VP Development, and IT Director – InformationWeek, 3 rd party databases 396 Software Vendors – Typical titles were CEO, CMO, VP Product Marketing, and VP Product Management – SIIA, 3rd party databases Email Survey in September 2004

6. Slide 6The Standard in Software Licensing & Installation Perpetual versus Subscription: Today Two-thirds of publishers focus on perpetuals

7. Slide 7The Standard in Software Licensing & Installation Perpetual versus Subscription: Tomorrow? Publishers planning to increase subscriptions

8. Slide 8The Standard in Software Licensing & Installation Perpetual versus Subscription: Enterprise View But enterprises prefer perpetuals…

9. Slide 9The Standard in Software Licensing & Installation Publisher License Metrics: Today Diverse mix reaches diverse buyers

10. Slide 10The Standard in Software Licensing & Installation Publisher Licensing Metrics: Tomorrow? New metrics gaining ground

11. Slide 11The Standard in Software Licensing & Installation Publisher License Metrics: Enterprise View But enterprises still prefer concurrent user…

12. Slide 12The Standard in Software Licensing & Installation License Compliance: Today Mix of techniques

13. Slide 13The Standard in Software Licensing & Installation License Compliance: Tomorrow? Migration to automated software compliance

14. Slide 14The Standard in Software Licensing & Installation License Compliance: Enterprise View Enterprises prefer centralized licensing

15. Slide 15The Standard in Software Licensing & Installation Software Maintenance by Customer Type Consumers pay less … and get less. Average 21% maintenance

16. Slide 16The Standard in Software Licensing & Installation Software Maintenance by Publisher Size Fairly uniform across publishers Average 21% maintenance

17. Slide 17The Standard in Software Licensing & Installation Study Key Findings Perpetual versus subscription – Software publishers moving strongly to subscription – Enterprise respondents prefer perpetual to subscription 2:1 Licensing enforcement going digital – New licensing models based on metrics gaining popularity – Concurrent and per user pricing models still preferred – Buyers still comfortable with no (paper) compliance, but prefer network licensing and product activation to audit teams or hardware dongles Maintenance fees – Overall average 21% – Enterprises demand more, and pay more

18. Slide 18The Standard in Software Licensing & Installation AGENDA Software Pricing & Licensing Study Software Value Management Case Studies How Do You Rate?

19. Slide 19The Standard in Software Licensing & Installation SOFTWARE VALUE MANAGEMENT It begins once engineering is ready to release the software that they have built. It ends when a customer retires the application. DefineBuildMarketSellDistributeServiceRenewRetire Software Value Management is a set of activities during the software lifecycle that are focused explicitly on maximizing the value of one’s software.

20. Slide 20The Standard in Software Licensing & Installation Software Publisher Software Customer SOFTWARE VALUE MANAGEMENT (SVM) SVM activities are undertaken by BOTH software publishers AND their customers. DefineBuildMarketSellDistributeService Renew BuyMaintain Prepare & Deploy Retire

21. Slide 21The Standard in Software Licensing & Installation Software Pricing & Licensing Study Software Value Management Case Studies How Do You Rate? AGENDA

22. Slide 22The Standard in Software Licensing & Installation SOFTWARE VALUE MANAGEMENT VENDOR CASE STUDIES Productize Price & License DistributeEvaluatePurchasePrepareMaintainDeployRe-Purchase “Market segmentation and better enforcement with licensing technology helped us create a substantial new revenue stream.”

23. Slide 23The Standard in Software Licensing & Installation SOFTWARE VALUE MANAGEMENT VENDOR CASE STUDIES “Customers had to guess how many seats they needed…” “It really comes down to making sure that [customers] have access to our software.” ProductizeDistributeEvaluatePurchasePrepareMaintainDeployRe-Purchase Price & License

24. Slide 24The Standard in Software Licensing & Installation “Sometimes we do business with companies we don’t know well, in other parts of the world. It’s nice to be confident that after the evaluation they really do have to pay us to continue using the software.” SOFTWARE VALUE MANAGEMENT VENDOR CASE STUDIES Productize Price & License DistributePurchasePrepareMaintainDeployRe-PurchaseEvaluate

25. Slide 25The Standard in Software Licensing & Installation MOST ENTERPRISES ARE NOT TRACKING LICENSE COMPLIANCE “What types of software license information do you track?”

26. Slide 26The Standard in Software Licensing & Installation “Before we had problems with conflicting installs, which we had to resolve through a lengthy trial & error approach.” “Now we proactively identify those problems upfront before we deploy our applications.” SOFTWARE VALUE MANAGEMENT ENTERPRISE CASE STUDIES Productize Price & License DistributeEvaluatePurchaseMaintainRe-PurchasePrepareDeploy

27. Slide 27The Standard in Software Licensing & Installation 5.3 million customers needed to have the most up-to-date software “Today it is easy for us to deliver software and data updates to all our users thereby increasing customer satisfaction and eliminating costly support calls.” SOFTWARE VALUE MANAGEMENT VENDOR CASE STUDIES Productize Price & License DistributeEvaluatePurchasePrepareDeployRe-PurchaseMaintain

28. Slide 28The Standard in Software Licensing & Installation Software from 32 vendors supporting 18,000 people globally “We now understand exactly what our license requirements are for the whole corporation. With that information we can make better, more informed and more strategic decisions.” SOFTWARE VALUE MANAGEMENT ENTERPRISE CASE STUDIES Productize Price & License DistributeEvaluatePurchasePrepareDeployMaintainRe-Purchase

29. Slide 29The Standard in Software Licensing & Installation SVM – THE BOTTOM LINE FOR THE SOFTWARE VENDOR Increased Revenues through… – Better Pricing – Differentiated Products – Broader market penetration – Deeper account penetration Greater customer service…and satisfaction

30. Slide 30The Standard in Software Licensing & Installation SVM – THE BOTTOM LINE FOR THE ENTERPRISE Increased Productivity with… – Broader software distribution rights – Greater uptime – Optimized license purchasing Reduced Support Costs through – Easier software deployment – Easier license support – Reduced crashes

31. Slide 31The Standard in Software Licensing & Installation AGENDA Software Pricing & Licensing Study Software Value Management Case Studies How Do You Rate?

32. Slide 32The Standard in Software Licensing & Installation SVM: HOW DOES YOUR COMPANY RATE? Vendors: Are you maximizing your revenue potential? Are you able to reach every potential user of your application? Are end-users instantly aware of new releases? Enterprise: Are you maximizing your organization’s productivity? Are you buying too much capacity? Too little? Can you quickly deploy new software with little effort or conflict concerns? Productize Price & License DistributeEvaluatePurchasePrepareMaintainDeployRe-Purchase ?????????

33. Slide 33The Standard in Software Licensing & Installation SVM Stage: DISTRIBUTE Productize Price & License EvaluatePurchasePrepareMaintainDeployRe-PurchaseDistribute Software Vendor Scorecard ScoreStrategic Implications 0-3 Your company is making it harder for your customers than it needs to be, simplifying the customer experience could increase their satisfaction, and reduce your operational costs. 4-7 You are almost there. Automating all license & software delivery activities could lead to increased revenues and decreased operational costs. 8-20 Your company is creating value for your customers and maximizing profitability. DISTRIBUTE (a) In Use No-0 1-Yes (b) Impact on Revenues Low-2-3-4-High (c) Score (a) x (b) Licenses & software are available from one web-based location 0 or 11 – 2 – 3 – 4 – 5 License keys are automatically generated based on preset rules & customer entitlements 0 or 11 – 2 – 3 – 4 – 5 All activity is captured in your CRM system0 or 11 – 2 – 3 – 4 – 5 Customers have web-based, self-service tools to manage their accounts and licenses 0 or 11 – 2 – 3 – 4 – 5 TOTAL

34. Slide 34The Standard in Software Licensing & Installation SVM Stage: PURCHASE Productize Price & License DistributeEvaluatePrepareMaintainDeployRe-PurchasePurchase Software Vendor Scorecard ScoreStrategic Implications 0-3 Your company can probably increase conversion rates and win more customers with more flexible systems in place 4-7 Check with your salesforce – if you provide them with more flexibility they may be able to close more sales 8-20 Your salesforce has the flexibility to maximize their sales with each customer PURCHASE (a) In Use No-0 1-Yes (b) Impact on Revenues Low-2-3-4-High (c) Score (a) x (b) Sales team can customize license terms for any customer and the ERP applications easily support this. 0 or 11 – 2 – 3 – 4 – 5 Sales team can easily “turn off functionality” of your software to meet/justify a customer’s budget constraints 0 or 11 – 2 – 3 – 4 – 5 Customers can easily buy more licenses via a 24x7, web-based self-service 0 or 11 – 2 – 3 – 4 – 5 Customers and you can see their purchase history and how that may impact new entitlements. 0 or 11 – 2 – 3 – 4 – 5 TOTAL

35. Slide 35The Standard in Software Licensing & Installation SVM Stage: PURCHASE Productize Price & License DistributeEvaluatePrepareMaintainDeployRe-Purchase Enterprise Scorecard Purchase ScoreStrategic Implications 0-3 You may be able to have a significant impact on your company’s bottomline by either reducing software expenditures or increasing end-user productivity 4-7 If you negotiate some of these non-financial items with your software vendors, you may be able to improve end-user productivity and satisfaction. 8-20 Your company is doing and excellent job at vendor negotiation and providing your employees with adequate access to software tools PURCHASE (a) In Use No-0 1-Yes (b) Impact on Revenues Low-2-3-4-High (c) Score (a) x (b) Have negotiated licensing terms so that your users gain maximum access to software 0 or 11 – 2 – 3 – 4 – 5 Have methods in place to track actual software usage so that you can accurately estimate requirements 0 or 11 – 2 – 3 – 4 – 5 Have negotiated optional “pay-per-use” provisions in case maximum license limit is reached. 0 or 11 – 2 – 3 – 4 – 5 TOTAL

36. Slide 36The Standard in Software Licensing & Installation SVM Stage: MAINTAIN Productize Price & License DistributeEvaluatePurchasePrepareDeployRe-Purchase Enterprise Scorecard Maintain ScoreStrategic Implications 0-3 Your company is not actively managing your installed applications creating the opportunity for downtime 4-7 Small improvements to the way your product is maintained can result in reduced risk of downtime 8-20 Your company is actively managing your installed application and you have a low risk of downtime MAINTAIN (a) In Use No-0 1-Yes (b) Impact on Revenues Low-2-3-4-High (c) Score (a) x (b) Can track and understand all applications installed across enterprise 0 or 11 – 2 – 3 – 4 – 5 Can easily discover all available updates for deployed apps across enterprise 0 or 11 – 2 – 3 – 4 – 5 Routinely control, manage and test all updates before deployment 0 or 11 – 2 – 3 – 4 – 5 TOTAL

37. Slide 37The Standard in Software Licensing & Installation SOFTWARE VALUE MANAGEMENT Is your company extracting the maximum value from its software? DefineBuildMarketSellDistributeServiceRenewRetire SVM is a set of activities during the software lifecycle that are focused explicitly on maximizing the value of one’s software.

38. Slide 38The Standard in Software Licensing & Installation FOLLOW-UP SVM Scorecards? Send email to cbuk@macrovision.comcbuk@macrovision.com Pricing & Licensing report? Download at www.SoftSummit.comwww.SoftSummit.com Sell SVM software? If your company contributes to the Software Value Management chain, we'd like to invite you to a special consortium on Jan 25. Please contact David Rowley at drowley@macrovision.com.drowley@macrovision.com