Table:
| Year Ended December 31, |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | % Change vs. Prior Year |  |
|  | 2019 | 2018 | 2017 | 2019 | 2018 |
| (in thousands) |  |  |  |  |  |
| Cost of software license | $ 2,626 | $ 5,297 | $ 5,483 | -50% | -3% |
| Cost of cloud subscriptions, maintenance and services | $282,341 | $235,584 | $208,045 | 20% | 13% |
| Cost of hardware | - | - | $32,205 | N/A | -100% |
| Total cost of revenue | $ 284,967 | $ 240,881 | $ 245,733 | 18% | -2% |
Paragraphs:
Cost of Software License Cost of software license consists of the costs associated with software reproduction; media, packaging and delivery; documentation, and other related costs; and royalties on third-party software sold with or as part of our products. In 2019, cost of license decreased by $2.7 million, compared to 2018 principally due to a $1.7 million decrease in third-party software license fees and a $1.0 million decrease in royalty costs. In 2018, cost of software license decreased $0.2 million compared to 2017 principally due to the decrease in license revenue which resulted in lower royalty costs. Royalty costs decreased $2.1 million and were partially offset by a $1.7 million increase in third-party software license fees.
Cost of Cloud Subscriptions, Maintenance and Services Year 2019 compared with year 2018 Cost of cloud subscriptions, maintenance and services consists primarily of salaries and other personnel-related expenses of employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees. The $46.8 million increase in 2019 compared to 2018 was principally due to a $25.8 million increase in compensation and other personnelrelated expense resulting from increased headcount in cloud operations and professional services, a $9.4 million increase in performance-based compensation expense, and a $8.5 million increase in computer infrastructure costs related to cloud business transition. Year 2019 compared with year 2018 Cost of cloud subscriptions, maintenance and services consists primarily of salaries and other personnel-related expenses of employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees. The $46.8 million increase in 2019 compared to 2018 was principally due to a $25.8 million increase in compensation and other personnelrelated expense resulting from increased headcount in cloud operations and professional services, a $9.4 million increase in performance-based compensation expense, and a $8.5 million increase in computer infrastructure costs related to cloud business transition.
Year 2019 compared with year 2018
Cost of cloud subscriptions, maintenance and services consists primarily of salaries and other personnel-related expenses of
employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees. The
$46.8 million increase in 2019 compared to 2018 was principally due to a $25.8 million increase in compensation and other personnel related
expense resulting from increased headcount in cloud operations and professional services, a $9.4 million increase in
performance-based compensation expense, and a $8.5 million increase in computer infrastructure costs related to cloud business
transition.
Year 2018 compared with year 2017
The $27.5 million increase in 2018 compared to 2017 was principally due to an $11.6 million increase in performance-based
compensation expense, an $8.8 million increase in computer infrastructure cost related to cloud business transition, and a $7.0 million
increase in other compensation and other personnel-related expenses resulting from increased headcount in professional services.
Cost of Hardware
As discussed above, we adopted the new revenue recognition standard as of January 1, 2018. As a result, we now recognize our
hardware revenue net of related costs which reduces both hardware revenue and cost of sales as compared to our accounting prior to
2018. Had we presented the results for 2017 under ASC 606, cost of hardware would have been presented as zero as we would have
recognized our hardware revenue net of related costs. In 2019, cost of hardware decreased $3.5 million compared to 2018 on
decreased hardware sales, while in 2018, cost of hardware increased $3.7 million compared with 2017 on increased hardware sales
Question:
What caused the cost of software license to go down in 2019?
Answer: a $1.7 million decrease in third-party software license fees and a $1.0 million decrease in royalty costs.