Proprietary Software: What It Is, Examples, & Licenses

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Celso Crivelaro
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Celso Crivelaro
|
Head of Engineering
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Learn the importance of building proprietary software for your company, and when it makes sense to incorporate it into your business.
Published on
March 27, 2023
Updated on
April 11, 2024

The world of software has evolved significantly in the last few decades. Tech companies and IT departments now have a wide range of options regarding the software they use. Proprietary software is one such option and an important one for companies to understand. This is because proprietary software restricts how users can use it and who owns the rights to the software. Therefore, to avoid legal issues, companies must understand the basics of proprietary software and know when, why, and how to use it.

History of Proprietary Software

Before we get into what proprietary software is, it's worth noting the history of this type of software. When computers were bulky and expensive, companies and individuals who needed them could only afford to lease them. These computers came with already installed software that was free to use.

In 1969, however, IBM started charging for its software. Nevertheless, it wasn't until 1983 in the court ruling of Apple Computer, Inc. v. Franklin Computer Corp that software became considered intellectual property and subject to copyright laws. This ruling changed how companies viewed software and laid the foundations for proprietary software.

What Is Proprietary Software?

Proprietary software, also called closed source, is a type of software owned by a single entity and licensed to other parties who wish to use it. This means this type of software doesn't allow users to access the source code. It typically restricts how users can use and modify it, differentiating it from open source software.

Once you purchase proprietary software, you receive a license to use it. This license limits how you can use it and restricts its further distribution. For instance, the owner may not allow you to make copies of the program or modify it in any way. This means the source code remains closed, and users can only access the compiled version of it.

In addition, proprietary software typically has a copy protection system that makes it hard to copy and distribute without permission. Proprietary software is usually licensed per user or on a subscription basis, which provides software owners with a steady and reliable source of income.

Proprietary software companies typically hold all rights and ownership over the software. The owner can, therefore, take legal action against anyone who violates the terms of their license. Companies and users are, therefore, advised to read and adhere to the license requirements of any proprietary software they purchase.

Examples of Proprietary Software

Various industries use proprietary software for different applications. This section will look at some of the most popular proprietary software categorized by use.

Proprietary Antivirus Software

With the rise of online threats, antivirus software has become a necessity for computers and other devices. Proprietary antivirus software is primarily designed to protect users from viruses, malware, and other cyber threats. Examples of proprietary antivirus software include:

  • Norton Antivirus
  • McAfee Antivirus
  • G DATA Software
  • Kaspersky Anti-Virus

Proprietary Operating Systems

These underlying software structures enable computers and other devices to function. Proprietary operating systems have been around for a long time, with most of them created by major computer manufacturers like Microsoft and Apple. Examples of proprietary database software include:

  • Windows 10, 11
  • iOS
  • ChromeOS
  • MS-DOS

Proprietary Database Software

Database software is used to store, organize, and analyze data. Proprietary database software allows users to manipulate data and build reports without having access to the source code. Examples of proprietary database software include:

  • Oracle Database
  • IBM DB2
  • SQL Anywhere
  • SQL Server Express

Proprietary vs. Open Source Software

As mentioned earlier, proprietary software is different from open source software. Proprietary software is not open to the public, and users cannot access or modify the source code. Open source software, however, is publicly distributed and allows users to view, modify, and share its source code.

Open source software is usually free to use, while proprietary software typically has a license fee. Proprietary software companies can also charge for upgrades and support, while open source software companies may not. Proprietary software is often more user-friendly since it's designed for a specific purpose. Alternatively, open source software is customizable.

In some instances, open source software can become proprietary, known as a proprietary fork, which are versions of open source software that developers modify and copyright as their own.

Proprietary Software vs. Other Types of Software

Other than proprietary and open source software, there are other types of software. These include:

Freeware

Freeware is software that users can download and use without restrictions or fees. Independent developers create freeware and typically don't provide support or take responsibility for any issues related to it. Users can share and modify freeware as long as they make the changes available to the public.

Shareware

This type of software is initially free to use. However, users may need to pay a fee or register at some point if they want to continue using it or access additional features. Shareware is usually offered in trial versions, and users can decide whether or not to purchase the full version. Some popular examples of shareware include Adobe Photoshop, WinRAR and Skype.

Abandonware

As the name suggests, this is software that has been abandoned by its developer. It's the perfect solution for users who want to use software without paying a fee since it is no longer supported by its developer. However, due to the inherent security risks, users should steer clear of abandonware as it could contain unpatched vulnerabilities that can put your personal information and data at risk.

Advantages of Proprietary Software

Proprietary software has various advantages for its users. These include:

Bug Free

Many proprietary software companies invest heavily in quality assurance and testing. This ensures the software is bug free and provides users with reliable solutions for their needs. Proprietary software companies also provide free patches to fix any bugs that may arise. This makes this type of software more stable and reliable than its open source counterpart.

Easy to Use

Proprietary software companies design their software with the user in mind. These companies invest heavily in user interface design and ensure their software is easy to use, even for those with no technical background.

High Performance

Proprietary software companies typically invest heavily in research and development to ensure that their software offers high performance. Proprietary software is, therefore, often faster and more reliable than open source alternatives.

Better Support

Proprietary software companies often support users via helpdesks and online resources. This additional layer of security ensures that users can quickly and easily get help if they need it.

Clear Roadmap for Development

Unlike open source software, proprietary software companies usually provide users with a clear roadmap for development. Proprietary software companies typically have a team of developers working on the software, which helps them craft software upgrades. This ensures that users know the features to expect and can plan accordingly.

Disadvantages of Proprietary Software

Proprietary software also has some drawbacks, including:

High Cost

Proprietary software companies often charge an initial (and sometimes) ongoing subscription fee for their software. This can be expensive for companies and result in a large upfront cost. Moreover, using proprietary software requires companies to hire proprietary developers to maintain and develop their software. Hiring and training these developers can be expensive and time-consuming.

Fewer Options

Proprietary software companies typically offer limited options and features. This means users may not find the exact solutions they need, and have to settle for something close enough. Proprietary software companies cannot always add custom features or modify the software to fit their specific needs.

Limited Freedom of Use

Proprietary software is often heavily restricted in terms of how users can use it and what changes users can make. Proprietary software companies often require users to sign a license agreement, which specifies how they can use their software. Proprietary software is also typically copy-protected, making it difficult to share or resell.

Restricted Customization

Proprietary software is usually designed for a specific purpose. Therefore, users often cannot customize it to their own needs. Proprietary software companies also don’t usually provide users with the ability to modify or tweak their software.

Lack of Transparency

Proprietary software companies often keep their source code private. This means that users may not be able to review the code to ensure that it’s secure and reliable.

Types of Proprietary Software Licenses

Software licensing is a legal agreement between the company that owns the software and its users. It is a way for companies to protect their intellectual property and ensure that users adhere to the terms of use. When you use proprietary software, you must adhere to its license terms.

A proprietary software license generally includes the following information:

  • The proprietary software company’s name and contact details.
  • What the user can do with the software.
  • Ownership of the software and intellectual property rights.
  • Prohibited uses of the software.
  • License termination terms.
  • Proprietary software company’s rights and responsibilities.
  • Proprietary software company’s warranties and liabilities.
  • Proprietary software company’s customer service policies.
  • Proprietary software company’s refund policy.
  • Proprietary software company’s support and maintenance.
  • Proprietary software company’s liability for damages caused by the software.

Microsoft is a great example of a proprietary software company. The company offers several licenses for its software, such as the Microsoft End User License Agreement (EULA). This license includes the standard proprietary software license terms, such as prohibitions on reverse engineering and redistribution of the software.

The EULA also specifies the rights and responsibilities of users with respect to the software. It also outlines how users can terminate the license in certain circumstances, such as if they violate the terms of use.

Proprietary software licenses typically fall into two categories:

Perpetual Licenses

A perpetual license is a one-time fee for the right to use proprietary software indefinitely. The user does not need to pay ongoing fees and can use the software if they comply with the license terms. While this type of license may appear as a cost-saving option, you may end up paying more for extras, such as support and upgrades.

Subscription Licenses

A subscription license involves a recurring fee for access to the software. The user pays a fee each month or year to use the software and can cancel their subscription when they choose.

The Future of Proprietary Software

While open source software has become increasingly popular in recent years, proprietary software still plays an important role in businesses and organizations. Proprietary software companies often have the resources to develop more feature-rich and high-performance software compared to open source companies. Proprietary software companies can also provide better support and customer service than open source companies.

In the future, proprietary software will likely remain a key part of business and organizational functioning. As such, proprietary software companies will need to stay competitive by providing high-performance and reliable software. They'll need to offer flexible and cost-effective licensing options and provide better customer service and support. Proprietary software companies will also need to focus on developing innovative solutions to meet the changing needs of customers.

Nevertheless, some industry leaders have predicted that open source software will eventually replace proprietary software. Proprietary software companies must, therefore, stay abreast of the changing technological landscape and adapt accordingly to remain competitive.

Hire Proprietary Software Developers With Revelo

Now that you know what proprietary software is, the advantages and disadvantages of using it, and the types of licenses associated with it, you're ready to make an informed decision about what software to use. Proprietary software may be the right choice for your business, but it's important to understand what you're committing to before incorporating it. By familiarizing yourself with the basics of proprietary software, you can ensure that the solution you choose is the right fit for your needs.

If your business requires proprietary software development, you'll need to hire developers with the expertise and experience necessary to develop this type of software. At Revelo, we connect tech companies in the US with experienced remote software engineers in Latin America. Our proprietary software developers are pre-vetted and have the skills to help you build the solutions your business needs.

Contact us today to learn more about how we can help you find and hire the best proprietary software developers for your project.

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