Written by Cris Wendt , Principal Strategy Consultant , Flexera Software

The rapid adoption of software in physical goods Marc Andreessen , the inventor of the web browser , said in 2011 that ‘ software is eating the world ’. Increasingly the value of physical devices is defined by the embedded software inside of those devices , or the control software that helps to manage those physical goods . In this context , it ’ s important to understand how software is different to hardware , and what it means to eliminate digital waste that is so hard to characterise , yet so important to understand . Eliminating digital waste can drive up revenue and increase overall product margins .

Why is this important ? In our customer engagements , we have found classic hardware companies are seeking to have high margin software become 40 percent or higher of overall revenues . In addition , many of these companies find that their value and market differentiation are due to software . In a discussion with a marketing executive at a large networking company that manufactures and sells large network switches , I was told ‘ we are a software company – all of our value is in the software . The hardware you see is mostly off-theshelf components that anyone can buy and use . Even the Tesla has been described as a computer with software on wheels . And of course , the Nest thermostat is an expensive ,

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