Computer Associates 2013 Annual Report Download - page 24

We continue to be engaged in an effort to more fully employ our intellectual property by strategically licensing and/or
assigning selected assets within our portfolio. This effort is intended to better position us in the marketplace and allow us
the flexibility to reinvest in improving our overall business.
Product Licensing and Maintenance
For traditional, on-premises licensing, we typically license to customers either perpetually or on a subscription basis for a
specified term. Our customers also purchase maintenance and support services that provide technical support and any
general product enhancements released during the maintenance period.
Under a perpetual license, the customer has the right to use the licensed program for an indefinite period of time upon
payment of a one-time license fee. If the customer wants to receive maintenance, the customer is required to pay an
additional annual maintenance fee.
Under a subscription license, the customer has the right to usage and maintenance of the licensed products during the term
of the agreement. Under our flexible licensing terms, customers can license our software products under multi-year licenses,
with most customers choosing terms of one to five years, although some customers seeking greater cost certainty may
negotiate longer terms. Thereafter, the license generally renews for the same period of time on the same terms and
conditions, but subject to the customer’s payment of our then-prevailing subscription license fee.
Within these license categories, our contracts provide customers with the right to use our products under a variety of
models including, but not limited to:
•A typical designated CPU (central processing unit) license, under which the customer may use the licensed product on
a single, designated CPU.
•A MIPS (millions of instructions per second)-based license, which allows the customer to use the licensed product on
one or more CPUs, limited by the aggregate MIPS rating of the CPUs covered by the license.
•A user-based license, under which the customer may use the licensed product by or for the agreed number of licensed
users.
•A designated server license, under which the customer may use a certain distributed product on a single, designated
server. The licensed products must be licensed for use with a specific operating system.
Customers can obtain licenses to our products through individual discrete purchases to meet their immediate needs or
through the adoption of enterprise license agreements (ELAs). ELAs are comprehensive licenses that cover multiple
products and also provide for maintenance and support.
For our mainframe solutions, the majority of our licenses provide customers with the right to use one or more of our
products up to a specific license capacity, generally measured in MIPS. For these products, customers may acquire
additional capacity during the term of a license by paying us an additional license fee. For our enterprise solutions, our
licenses may provide customers with the right to use one or more of our products limited to a number of servers, users or
copies, among other things. Customers may license these products for additional servers, users or copies, etc., during the
term of a license by paying us an additional license fee.
SaaS is another delivery model we offer to our customers when a customer prefers to use our technology off-premises with
little to no infrastructure required. Our SaaS offerings are typically licensed using a subscription fee, most commonly on a
monthly or annual basis.
Competition
Our industry is extremely competitive and experiences rapid technological change, the steady emergence of new companies
and products, evolving industry standards and continually changing customer needs. We compete with many established
companies, the majority of which have substantially greater financial, marketing and technological resources than we do.
Our primary competitors include BMC Software Inc., Compuware Corporation, Dell Inc., Hewlett-Packard Company,
International Business Machines Corporation, Microsoft Corporation, Oracle Corporation and VMware, Inc. These firms
compete broadly across our multiple product lines.
We also compete with numerous smaller companies that provide products in a single area of our portfolio. Many of these
firms are inherently more agile due to their size and scope, and are able to evolve more rapidly to meet changes in the
technology landscape, including delivery of their solutions under the cloud computing model.
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