License Dongle

A license dongle (also known as a hardware license key or software dongle USB) is a piece of electronic hardware that can unlock a software license, provide copy protection for software, or decipher encrypted licensing content. A dongle is typically used in contexts where physical protection against piracy and unauthorized distribution are essential, as well as providing another route for software monetization as part of software license management. Here's an overview of how dongles work, how they act as a physical defense to prevent unauthorized usage, and a guide to why they're now in decline.

When a licensing dongle is connected to a computer port, it can be used to unlock software, data or content without needing to be connected to a server or cloud service. Modern USB dongles incorporate licensing security features and are encryption based to secure data from being hacked or nefariously distributed.

Originally introduced by independent software vendors (ISVs) to enhance their licensing processes, dongles protect software licensing and prevent unauthorized usage or distribution of secure, high-value or sensitive applications. First using parallel ports, dongles now use USB ports to unlock license content by containing the licensing information for a specific version of an application.

Dongle-based licensing comes in two main forms: local, device-only licensing access and network or server licensing access. Local licensing by dongle works when a user plugs the dongle into the USB port on their computer. The license on this type of installation is unique to the dongle and device it's connected to, so it can't be used by other network users, ensuring a degree of security. Network or server installation works in a server-client model. By connecting the dongle to a configured license server with the dongle server software, computers using the license on the network should also have access to the runtime data files from the license dongle’s server.

As well as protecting software access, network license dongle installation gives admin users the ability to see reporting data and get an overview of license usage, usually based on bundling software utilities installed alongside the license. A more complete report on user activity and licensing is typically available through the dongle license servers.

A dongle works through electronic copy protection. It is programmed with encryption or hardware keys with the license information needed to unlock software or other licensing content. It usually protects desktop-based applications, but can also protect web or cloud systems as well.

The firmware on the dongle contains information that grants access to software and sets the licensing terms of how and what the end user can access. It enforces licensing terms, such as the features available, time or location of use, and the end user can only secure license access to the software application if they physically have the dongle attached to a USB port on their computer.

A dongle was once seen as the solution of choice for software monetization or licensing management, but not anymore. Traditionally useful for unlocking license access to desktop applications, dSVs in specialist verticals like healthcare, GIS or image processing may still use them, but they're becoming increasingly rare in licensing and Frost & Sullivan research indicates the growth rate in hardware enforcement will rapidly decline in the near future.

Dongles can also be used for licensing web applications. A user plugs the USB dongle into their device, visits a web page and logs in, with the dongle validating the software license before loading features or unlocking licensing content in the application.

Dongles physically enable licensing access to software, but software vendors struggled to manage them when their use became the norm. As a result, dongle-protected software has fallen out of popularity, also helped by:

• Dongles being easily lost or damaged (giving rise to the term "dodgy dongle")
• Compatibility issues with different operating systems or network configurations – they don't typically offer a "one size fits all"
• Dongles being passed between users, undermining the security of access or use
• Increasing costs to produce, store and deliver dongles, and steep licensing replacement costs
• Hardware cloning becoming commonplace, leaving vendors to address licensing breaches
• Issues with upgrading and updating hardware keys to match the latest version of software or changing license terms
• Chip shortages limit the ability to produce dongles compatible with new versions
• Disruption caused by the global pandemic is still affecting supply chains, particularly for the eastern part of the world where dongle deliveries can take 3-6 months
• Advances in back-office based identity and machine/device fingerprint capture are increasingly preferred as modern methods of software and firmware licensing

Users now demand the most flexible, secure, protected and manageable software licensing solutions from vendors. End users often want quick access to efficiently use high-value software applications without thinking about the route to access a license. For that reason, dongles and USB keys for licensing have quickly grown obsolete in all but the most specialized use cases.