Replies to post #186591 on Wave Systems Corp. (fka WAVXQ)

[bigbob]

Another take on licensing. In the ERP software world (I am involved in PeopleSoft / Oracle products), licensing is done upfront on a 1x basis usually based on number of employees or number of users (no needing to track actual laptops or PC's). If an employee or user resigns (and is replaced by another employee, the license amount doesn't change (just like the license amount on many software products would NOT change simply due to changing to a newer PC). Its the annual maintenance fees that are the real cash cow. They are huge and rarely are decreased for any reason. If a company expands via an acquisition and now has more employees (or in Wave's likely situation, more PC's being used) then you can get an increase in the licensing fee.

[RootOfTrust]

Ispro, I'm still investigating this, but it looks to me like it comes down to renewing ERAS licenses. Typical imo is to issue an ERAS license priced with three years of support. This is exactly how the automaker is and from the number the customer is paying it comes to just north of $20/yr. per seat (cost to customer before Dell cut= approx. $6.33m) and Wave nets just south of $20/yr. per seat.

So...when the automaker begins buying new PCs after the current licensing begins to expire, it's negotiated again for the next three year deal. Imo look for Wave to price another $20/yr. per seat for their net. So imo it's not just whatever you think annual support is indefinitely...it's more like ERAS installation license is being renewed too.