Historically, software was commonly bundled at no additional cost with hardware purchases, with minimal emphasis on monetization or ongoing maintenance. The primary value resided in the hardware, while considerations for customer experience related to software were limited.
Air-gapped environments—isolated network segments employed to enhance device and network security—posed even greater challenges. These settings often operated under single-transaction models: a one-time device sale and/or perpetual software license.
Today, technology companies seek to maximize revenue and foster ongoing customer engagement. Delivering added value now requires that manufacturers of hardware and IoT devices continuously improve their software, deploy timely security patches, and proactively address the complexities unique to air-gapped environments.
As manufacturers increasingly pursue digital transformation and strive to boost annual recurring revenue, they are shifting how they monetize products. Rather than assigning a fixed price to hardware alone, there is a growing focus on monetizing the software embedded within these devices.
Drawing from my experience leading digital software transformation in the oil and gas sector, I have witnessed the significant impact enhanced software delivery can have on customer satisfaction. Improved data analytics, more effective communication through prompt notifications, and identification of opportunities for product innovation are just some of the benefits observed. Highly regulated sectors such as healthcare, government, and manufacturing, in particular, stand to gain significantly by monetizing the software-defined capabilities of their devices.
Meeting the Needs of Air-Gapped Product Customers
Monetizing software in air-gapped contexts presents more hurdles than in open network environments but remains both feasible and valuable. Consider the following scenarios and how they may impact your customer experience:
- A hardware and software company sells perpetual and subscription software to air-gapped customers. Software tracking relies solely on CRM/ERP system reports and manually generated licenses. The data is scattered across multiple systems limiting visibility, increasing compliance and governance risks.
- A company selling software to air-gapped customers who prefer to pay based on their consumption or usage of the software. Manual processes to track and bill are inefficient, error-prone, and lack unified reporting on customer usage and rights.
- Air-gapped customers using subscription software must renew before expiry to prevent service interruption, which could harm both their operations and perception of the provider.
As detailed in the Revenera Monetization Monitor 2025 Outlook reports, nearly half (44%) of surveyed product leaders from global technology companies say they lack insights to monetize the most valuable features of their software. Additionally, 39% of respondents say that more than half of their customers want insights into their data and 36% say that more than half already have access to usage data but want additional insights/functionality. By enhancing their monetization programs and offering diverse licensing models, including floating, usage, and consumption in air-gapped environments, technology companies can better align pricing, access valuable data insights, and monetize key features to meet customer needs.
The Value Proposition of Software Monetization in Air-Gapped Environments
Addressing the challenges inherent to air-gapped networks fosters innovation opportunities. Effective software monetization enables device manufacturers to:
- Minimize the security risks where outdated software versions are running or that occur when data transfer is performed with physical media.
- Streamline software updates and data transfers, eliminating time-consuming and error-prone manual processes.
- Enhance security and compliance—a critical concern for industries utilizing air-gapped environments.
- Improve governance by maintaining regular software update cadences, thereby elevating user experience.
- Monitor and manage subscription- and usage-based models efficiently.
- Deliver timely notifications regarding security patches, hotfixes, and upgrades, which depend on accurate usage data.
Transitioning from a traditional hardware model to an integrated hardware and software business also permits more robust collection and analysis of software usage data. These insights inform cross-functional teams—from customer support and IT to sales and executive management—enabling the measurement of key performance indicators critical to annual recurring revenue growth and customer retention.
Software usage analytics in air-gapped environments help answer vital questions, such as:
- What is the geographic distribution of deployed software?
- Who comprises the customer base, and what are their entitlements?
- Which products and features are most utilized, and in which industries?
- How frequently do demo conversions result in sales, and what drives or inhibits these outcomes?
- What are the trends for subscription renewals, retention, and churn?
Such comprehensive data supports informed decision-making around KPIs and other operational variables. Further investigation into these metrics can illuminate areas for strategic adjustment to improve customer relationships.
Enhanced Products, Customer Experience, and Revenue
In conclusion, adopting innovative approaches within air-gapped environments delivers substantial returns. Successful software monetization—which drives organizational growth and deepens customer loyalty—demands a progressive approach to managing licenses, entitlements, updates, and the breadth of usage data.