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"The virtual smart card would not. However, there is a risk that a stolen virtual smart card device would be easier to hack into and use to connect to a network by an unauthorized user. (until the device was recognized as lost and the virtual smart card placed on the revocation list)"
How do you figure this? The intruder would have to sniff the PIN out of the TPM is my understanding. The TPM platform is designed around the authorized user providing a PIN to the TPM and is designed to thwart brute force attacks to get the PIN.
Password protection[edit]
Access to keys, data or systems is often protected and requires authentication by presenting a password. If the authentication mechanism is implemented in software only, the access typically is prone to 'dictionary attacks'. Since the TPM is implemented in a dedicated hardware module, a dictionary attack prevention mechanism was built in, which effectively protects against guessing or automated dictionary attacks, while still allowing the user a sufficient and reasonable number of tries. With this hardware based dictionary attack prevention, the user can opt for shorter or weaker passwords which are more memorable. Without this level of protection, only passwords with high complexity would provide sufficient protection.
http://en.wikipedia.org/wiki/Trusted_Platform_Module
If a TPM-enabled VSC-enabled device can be hacked it defeats the entire TCG system. If the device is already booted up when it's hijacked then sure an intruder has access.
I agree tokens can be used from any device while a TPM-secured credential is only used from that device, however it's redundant to deploy both on the same device as a user ID. A TPM provides both user and device ID, whereas token is user only, and a token has no capability to establish device health and integrity.
Apples vs. oranges.
alea, I agree on your points and thanks for the complement. I suggest rereading the post; it's been edited.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=94171566
"from solms' safe harbour, i think the emphasis on architectural sales involving eras etc is going to take more of a back seat."
We've known ever since SEDs came along that ERAS found it's first market in them, not TPMs, therefore I'm interested to see how the Solms organization can scale up the SED customer base. Surely there is some kind of a legitimate pipeline he inherited. Perhaps some of it slid to the right as Wave's weak finances dragged or the sales team lacked "industry best practices" discipline in dealing with customers? At what I estimate to be north of 500k Wave-managed SEDs and climbing is the opportunity really built out ie. zero potential for closing significant business moving forward? I'm not sure it's all dead leaves in pipeline as you put it. We'll see.
I certainly agree with New Wave's point that if VSC is a solution that can be plugged into a customer's existing PKI, it's a shorter sales cycle because ERAS is not necessarily required, providing the customer is already managing these credentials using their existing infrastructure. I don't think ERAS is a huge deal to implement, certainly not for SEDs and probably not even for a broader than VSC deployment incuding something like WEM. I assume Solms' plan is come in with a hook such as VSC and upgrade the customer to a more compelete TC implementation down the road.
Important to get some initial use cases of scale Wave-managed TPM-enabled deployments. I think use cases was mentioned in the call.
Good morning alea....
"wave just hasn't got a big foundation of unspecified income from which to grow."
Yes, that's why billings for orders to new customers or existing customers building out or updating their deployments drives income, hopefully in a rising pattern. This is what an effective sales organization is able to do...build the customer base and sell more product to the existimg one.
"of these, i have no reason to think safend is about to go big; the timing of the maintenance renewal is a one-off; and we know the maximum scale of sandia. so there's nothing there to get terrible excited about, looking to q4."
I agree, with no knowledge of what orders are new to Q4 and how quickly new customer business or business to existing customers including maintenance renewals is increasing it's impossible to predict what if any the billings will increase over Q3. I'm guardedly optimistic however with the new leadership and changes that appear to be taking place in the sales organization that we will see a steady ramp-up in billings/income activity. Bear in mind as well that as the mass of active ERAS licenses continues to increase, that manintenace renewals at somewhere between $7.50-12.50/license per year becomes a reliable source of billings/income. I estimate active ERAS licenses are now north of 500k...1m will be a significant milestone imo.
"in my view, it is going to have to be one of the clear blue sky major orders to push them back to operational cfbe."
Larger orders certainly WOULD drive billings to CFBE and hopefully the new management and a more effective sales organization will build a pipeline that produces them each and every quarter. Again if the mass of $30-50 licenses grows sufficently, hopefully past the first million to several million and beyond, maintenance income alone becomes significant.
alea...
"the legacy income is providing a revenue foundation. They need that foundation to increase by maybe 20-25% in order to be confident of break even. but legacy income is made up of items that are either stable or declining."
Billings is the foundation I'm looking for to eliminate the negative cash burn. Solms used the word "billings" numerous times in the call so I know he's thinking along similar lines.
"small orders would approximately have to double to achieve the same effect. q3 saw a loss of upwards momentum for unspecified income. we've seen a step up in 2013 rather than a slope. so i don't see a 100% increase as very likely in the near term."
"which is why i concluded they could use the luck of a major order some time soon."
Large billings certainly would help to get to CFBE for this quarter.
(Edited): Q3 billings estimated break-down:
Note: I forgot to allow for non-Dell OEM bundled.
Dell bundled= $3.0m
Safend= $1.3m
Services= $.4m
Non-Safend enterprise licensing/maintenance and non-Dell OEM bundled= $2.4m
TOTAL BILLINGS= $7.1m
Notes:
1. Dell bundled may include enterprise licensing through Dell sales channels.
2. Safend $1.3m is revenues; may be inconsistent with Safend Q3 billings.
Q3 billings estimated break-down:
Dell bundled= $3.0m
Safend= $1.3m
Services= $.4m
Non-Safend enterprise licensing/maintenance= $2.4m
TOTAL BILLINGS= $7.1m
Notes:
1. Dell bundled may include enterprise licensing through Dell sales channels.
2. Safend $1.3m is revenues; may be inconsistent with Safend Q3 billings.
tkc, I understand what you are saying but at this point ITDAS is so minimal, that EBITDAS is pretty close to cash flow for the purpose of CFBE or in this case still not.
I still find the revenues number to be less important than the billings number mainly because the larger orders are taken over a 12 mo. period, so while Q3 revenues were $5.9m the actual billings were $7.1m. Imo the billings irregardless of the accounts payable/receivable factor is the more important number.
Unless I'm mistaken the billings number is what drives EBITDAS.
I'll risk some optimism here and say CFBE is very doable for Solms over the next Q or two.
Isn't EBITDAS the most important metric in evaluating the actual cash performance of the company ie. neutral EBITDAS= no cash burn?
To illustrate its operational performance on a cash-flow basis, Wave reports EBITDAS, a non-GAAP measure defined as earnings before impairment expense, interest expense, income taxes, depreciation, amortization and stock-based compensation expense. Wave’s negative EBITDAS improved to $2.2 million in Q3 ‘13, compared with negative EBITDAS of $4.2 million in Q3 ’12 and negative EBITDAS of $2.5 million in Q2 ’13.
http://www.wave.com/buzz/pr/wave-reduces-q3-net-loss-lower-expenses-revenues-63m-q3-total-billings-71m-exceed-q2-and-yea
Thanks ExPat...
So from your explanation there shouldn't be generic issues with putting TPM-secured certificates on client devices in terms of authenticating them through the various network gateways?
Brian Berger, when I spoke with him at 2010 Interop around the time PwC was starting to deploy, mentioned something to do with Cisco needing something in their stuff to make TPM deployment easier and that PwC was building what they needed to make it work. At the time I didn't come to any real understanding in speaking with Berger what the technical issues actually were.
I'm happy to assume with the paasage of 3 1/2 years that whatever these integration challenges may have been, if in fact they were typical to the garden variety client device TPM deployment, that they have been mostly worked out. Solms and Conte seem bullish on the virtual smart card solution, so presumably it's feasibly easy to deploy?
Not trying to make excuses for SKS but I am still looking for some technical help from your background in IT networking infrastruture.
While TPM is supported in many devices, most vendors don't offer adequate instruction on how to use it, Sprague said. "There's no technical guide for using TPM as a token on a Cisco or Juniper switch," he observed. "We are having to build templates that walk users through [implementation], step by step."
http://www.darkreading.com/end-user/trusted-computing-still-waiting-for-the/231601787
So I still don't understand. Let's say a client device on the network is configured using it's TPM as a virtual smart card and this device requests access, is there some TPM-based interface in e.g. a network switch required?
Cisco is finally in the TCG so I assume if they need to provide TPM-friendly interfaces they are now doing so.
Or part of the challenge for Wave has been building interfaces across the multitude of networking equipment?
Hello there tkc...
"Upgrades may be where the potential is but it's chewing up all the money."
Right...upgrades= Embassy enterprise software licensing e.g. ERAS.
Safend is all enterprise software licensing as well.
"With Dell rev going down, that makes Solms job even tougher. He'll have to cut and redeploy. he'll need to increase rev and seek funding to stablize the finances soon."
My theory is the ATM continues to be used, not necessarily to meet each end-of-the month expenses, but to bolster the balance sheet past any ongoing demand to make expenses. My guess is that the SKS sales organization had been losing some of their pipeline to weak finances and the dimishing credibility that goes along with it. Having some extra cash on hand would certainly help Solms with credibility moving forward in building new pipeline as well as hopefully restore some of the business that either had been lost or was holding back.
For sure Solms inherited a pipeline, what we don't know is the complexion of it. Sandia Labs had to be there before he arrived unless they had a short sales cycle.
Part of Solms strategy per the earnings call is to implement enterprise software sales industry "best practices" which hopefully will help build the pipeline and close existing business in it better than what was happening under the previous management.
Thanks tkc (eom)
If the smartphone market is worth persuing he will, if not he won't waste time or $ until it is.
One of my angles on the smartphone market (and MDM) as it relates to Wave is I have seen real world examples of enterprises who have deployed the use of authentication tokens e.g. RSA SecureID across all their users and devices and because the TPM solution isn't available on smartphones this can prevent these types of customers from investing in a TPM deployment on PCs including notebooks and tablets because they would still need their tokens for smartphone network access.
All Wave can do in facing tokens deployments is either wait for TPMs on smartphones or hope the customer rolls out on PCs and either keeps the added expense of tokens or retires them in favor of soft certificates (soft PKI) or some other means of authentication on the smartphones. Perhaps Wave could offer or support soft PKI on smartphones although I assume this would require product development.
Fact is there is a great deal of enterprise PC infrasructure and hopefully some of it will move forward with TPMs with or without smartphone support. PC infrastructure is managed through Windows Server Active Directory (AD) and is the enterprise's primary network access medium whereas smartphones infrastructure is not always AD-manageable and as a result IT can restrict access from it. Many employees have notebooks and tablets which are authorized for full remote access to the network resolving the issue of restricted access from smartphones.
There hopefully evolves significant interest in enterprises locking down their PC infrastructure with trusted computing and a customer that moves forward with this ought to have some kind of roadmap relating to when their smartphones will be trusted computing-enabled. Again if Wave could provide soft PKI support for smartphones that would be one way to approach the situation and manage all a customers devices including non-TPM smartphones with ERAS.
But you're right, Solms should not allocate resources in developing smartphone support unless there is demand or unless he's positive he can create it.
Thanks alea...we'll talk again.
I conceded a day or two ago I am not buying the stock based on any optimism I have for TPMs showing up en masse anytime soon on phones. I already said let's get traction on PCs first which New Wave here agreed with yesterday...in fact you as well conceded this point I recall.
I wasn't sure folks following our discussion were aware of SKS's comments in the CC last March so I posted them. Maybe they did reflect reality at the time and still do possibly. Perhaps at the TC conference he was speaking more from "the historical challenges" perspective to be safe. Who knows?
I've been fair in this discussion I think, and will be moving on now. Perhaps we'll take up another topic in the future.
Reality or Sprague Speak?
Decide for oneself.
9/24/13
Unfortunately, the real difficulty is convincing carriers or vendors to loosen their grasp of control. It is an issue of leverage and one that Sprague believes only one entity exists capable of wresting control away for the betterment of the industry.
"The only way we can wrestle control back from Verizon is through a requirement placed on the environment by a player strong enough to do that," he says. "The only player -- emphasis on the word 'only' -- is the U.S. federal space."
http://www.darkreading.com/mobile/why-a-hardware-root-of-trust-matters-for/240161739
3/18/13
Unknown Attendee
Steve, I promise you, my last comment is that there's a lot of speculation on whether the Samsung NOX, a programmer initiative that they announced, there were some other companies mentioned. Does that affect us one way or the other? Are we a part of this?
Steven K. Sprague - Chief Executive Officer, President, Director and Director of WaveXpress
So we just view ourselves as a second play in that. So the Trusted Computing phase -- place came into those discussions way later in the process. They started that a couple of years ago and we're pleased to see that they're investing in security as part of the device and we think Trusted Computing will play an extremely important role as -- it's a technology that should eventually become part of those kind of concepts and programs going forward. So clearly, you can't go out and buy the devices yet, handheld devices with TPMs in them. There are a few from Microsoft, there will be a lot more. I think the marketplace will be a little bit surprised by just how broadly that becomes available. If we believe what we're being told by the supply chain and the infrastructure and the players that are out there, I'm a little jaded. They all think it's going to be second quarter sometime. It's not, it's going to take them this whole year. But it will begin to show up in scale. And I think that it's a -- we've seen this process, it's takes a while for everybody to pay attention. But you're going to have a generic capability to put keys in a mobile device. And that will put competition on the existing carriers and infrastructure that controls exclusively that domain today. And it will change the world as we know it. And Wave will have some participation in that puzzle. I think we're doing a lot of the right things to play there but that's a very, very large change that's on its way coming down the pipeline. The technical pieces are in place already.
http://seekingalpha.com/article/1284601-wave-systems-management-discusses-q4-2012-results-earnings-call-transcript?page=8&p=qanda&l=last
OK this isn't necessarily TPM shipping just yet but it's support (an API) for it.
Hardware credential storage
Android also now supports hardware-backed storage for your KeyChain credentials, providing more security by making the keys unavailable for extraction. That is, once keys are in a hardware-backed key store (Secure Element, TPM, or TrustZone), they can be used for cryptographic operations but the private key material cannot be exported. Even the OS kernel cannot access this key material. While not all Android-powered devices support storage on hardware, you can check at runtime if hardware-backed storage is available by calling KeyChain.IsBoundKeyAlgorithm().
http://developer.android.com/about/versions/android-4.3.html
As I've been saying if TPMs get traction on PCs, enterprises will demand the same environment on smartphones. Imo the Android 4.3 API is evidence of this potential as well as the fact that Windows Phone 8 already requires TPM. I agree Windows Phone 8 is a small part of the mobile market but then so may be enterprise of the total market and it could be Windows Phone gets some traction in the enterprise sector if PCs get TPM traction. Note: I'm not counting on any of this until it actually happens.
"seems you are back with a theory that makes no sense of ss who said the carriers and vendors are blocking mobile tc. if your theory excludes those comments, then i guess you think he is uninformed. i think he has some idea about what's going on."
I don't know where you read in the article SKS saying verbatim that carriers and vendors are "blocking mobile TC". You must mean this:
Unfortunately, the real difficulty is convincing carriers or vendors to loosen their grasp of control. It is an issue of leverage and one that Sprague believes only one entity exists capable of wresting control away for the betterment of the industry.
Fine, but as he's saying that he knows Windows Phone 8 is a TPM phone offered by multiple MNO's and Google is building support in Android 4.3.
Have you ever heard the term Sprague Speak?
http://www.darkreading.com/mobile/why-a-hardware-root-of-trust-matters-for/240161739
Folks who follow the space closely say Android devices are being designed with TPM.
Windows Phone 8 is the only one in production.
Apple is the big question mark. I say if enterprise demand for TPM mobile reaches some kind of critical mass Apple may have to act or lose enterprise customers.
"To me, that's the efficient approach. Verizon will have vouched for TPMs when Verizon actually embeds them. Until then, it's just geeks chatting about possibilities."
Windows Phone 8 is here today. AT&T, T-Mobile and Verizon. MSFT embedded the TPM but the carriers are selling them. Android on the way.
http://www.bestbuy.com/site/Mobile-Phones-Promotions/Windows-Phone/pcmcat285700050004.c?id=pcmcat285700050004
Not buying WAVX 'cause of this but it's good to know TPM phones will be there when the enterprise needs them.
"I don't know how to explain this a new way."
You're doing a decent job of it.
"The issue with TPMs for the MNOs isn't about security or about certain useful functionalities. It's about TPMs and the open architecture they provide creating an alternative and parallel environment alongside SIM-Secure Element. This parallel environment enables business models and services which potentially turn the MNOs into bitpipe providers."
True, so the MNOs get something in exchange for hosting TPM which btw one design has it doing in the SIM.
"For example, MNOs charge for mobile phone services. TPM can provide the secure environment for a free or innovative mobile phone service that competes with the MNOs' own service."
But to be practical wouldn't that involve having the cellular infrastructure like what Google would acquire in buying T-Mobile?
http://www.extremetech.com/mobile/142205-why-google-should-just-shut-up-and-buy-t-mobile
I'm not saying it's impossible for someone to host VoIP in a TPM running on devices MNOs leases to users like us, but I would think MNOs could take countermeasures...icbw.
"TPM competes with their SIM-Secure Element Model which allows them to control the capabilities of mobile devices in a way that generates the sort of revenue they wish to receive."
At this point TPM would be far from competing with the SIM/secure element commerce to consumers; it would initially offer TCG capabilities for enterprise customers ie. Virtual Smart Card and UEFI Integrity. I assume if MNOs saw it going past these uses they would design countermeasures that wouldn't restrict the use of TPM for enterprise security but would somehow give them the ability to restrict the TPM architecture to wipe out their SIM services. Would TPM hosting in the SIM give the MNO control such that TCG enterprise services could take place there and not certain other things? I assume it could.
"So it's a problem for them. Which is why someone or something higher up the food chain needs to roll them over in order to override private interests in favour of a public good. Or so we think."
"Until that happens, the impasse is very likely to continue."
Windows Phone 8 is here with more on the way. Verizon endorses TPM in NSTIC so they must see a scenario acceptable to them where TPMs are on phones.
General comment to your post:
Your points about the potential threat to MNOs of third party-managed architectures are well taken and it's something they must deal with in a way that accomodates the demand for these architectures without them giving up their services revenue. There will be a middle ground somewhere here don't you think? The MNOs have oodles of very bright folks who see the writing on the wall. How long can they hold out against Google Wallet and Visa/Samsung with plenty more on the way?
"No more than MS defeats the purpose of a TPM to the extent it takes control of it in Windows 8."
All MS does in Windows 8 is make it easier for the user to take TPM ownership. As I previously explained, on the orginal XP TPM machines, the user had to physically go into the BIOS. Vista implemented a TPM initialization wizard where it's possible for an administrator to do scripting for remote access to activations over the network which is what Wave software does. Windows 8 takes the ease of activation and taking TPM ownership to another level but the user still ends up being in control of the TPM not MS.
"Rather than to discount it in a variety of ways, you really need to provide an explanation why the former great leader of TC ideas, SS, thinks what he thinks about MNO obstruction."
"With all due respect, are you really saying you and the other investor folks who follow standards groups online know more than he does? It sure sounds that way."
"I think maybe a sensible and prudent theory incorporates his cautions about the mobile TC world."
I'm not counting on broad TPM availability on phones any time soon. I am hopeful, and I'll use the word cautiously, that Wave is seeing signifcant interest from large enterprises in deploying TPM-enabled virtual smart card on PCs including notebooks and tablets and that this will translate into use cases and a growing demand from enterprises for the same capability on phones. Whether SKS quotes in the Dark Reading article accurately reflect actual TPM smartphone development activity in the marketplace I'm not sure, but there is Windows Phone 8 with MS fTPM plus other indications such as Android devices being designed with TPM plus Verizon supporting TPM-enabled device ID in NSTIC, so I am cautiously optimistic that TPMs in phones are coming and that the MNOs will support them.
Enterprise deployment of TCG architecture in phones does not in my opinion threaten the MNO's SIM-based architecture. If you disagree please tell me how a SIM can do UEFI integrity or provide an enterprise administrator with the ability to revoke a device's right to access the corporate network? You don't think MNOs will embrace the TPM's ability to provide this level of security for their enterprise and gov't customers?
MNOs can allow TPMs for TCG-based device security without losing their capability to use the SIM to provide services to their customers the users.
"and they'd also probably take control of the tpm so they can perform software updates and suchlike. in the same way ms has done."
An MNO can't take control of the TPM from the user at least not on the TPM ownership level. The purpose of the TPM architecture in the first place is user control of the TPM; without that the purpose of it is defeated.
The MNO still has control, using the SIM, of the device user's relationship with them, that's why they put your credentials in the SIM, that way unauthorized devices can't access their network to place phone calls or go on the internet.
Just because SKS was commenting in the Dark Reading article relating to the issue of MNO's allowing or being forced to allow a hardware root of trust (HROT) doesn't mean the process of designing HROT into phones hasn't begun and that MNOs will make these devices available.
The process of putting TPMs in phones might be more advanced than we are discussing here. Check out this thread:
http://www.atomicbobs.com/index.php?mode=read&id=848974
The key is demand from enterprise both private sector and gov't to have TPM in order to lock phones down in their corporate networks. MNOs can't say no just like they haven't with Windows Phone 8. It's basically a matter of getting device makers as with Windows Phone 8 to build the capability in.
Hello New Wave....
"With TPM mobile in an enterprise environment doesn't the carrier theoretically lose control of the devices on the network and thus the customer relationship for each device?"
Not at all, this is because the MNO never loses their SIM-based control of the device on their network, their network being that which is used to place phone calls and access the internet as well the user buying services in the network. Secure element is competitive to SIM while enterprise TPM is not, because TPM is first and foremost the means by which the user, initially the enterprise, can create a known device for their own corporate network and achieve BIOS/UEFI interity to protect corporate resources from rootkits on phones.
An enterprise TPM wouldn't cause the MNO to give up their control of the device in the MNO network and they could still sell the enterprise whatever they wanted to buy, anti-virus, PKI services whatever.
Even TPMs on consumer phones, I don't see the MNO losing control of their devices.
Google Wallet and Visa/Samsung, that's a diffenent issue than TPM control by the user because the MNO is giving up SIM-controlled commerce to secure element.
"in order to share ongoing revenue in a hypothetical scenario, wave has to bring a significant enterprise customer base to the party.
trouble is, to build that base, wave also wants a mobile solution."
It's true Wave does want a mobile solution but the objective is to begin building a significant base of enterprise customers who have first deployed TPMs to their PC infrastructure, then it's possible enterprises who ARE significant customers to the MNOs will demand the trusted computing solution on phones. There's tons of enterprise PC infrastructure out there and there is really no reason to not deploy TC on it just because TC is not deployable on phones, other than if a customer is wed to a tokens solution they may not spend money to deploy TC on PCs if they still need tokens for network access from both their PCs and phones.
It is feasible for enterprises to deploy TPMs on PCs and not on phones because, first their PCs are their more critical network infrastructure, and second if they have deployed MDM it's a separate management infrastructure than PCs thus there is no conflict between their TC-enabled PC infrastructure and their non-TC-enabled smartphone infrastructure.
You're right Windows is the smaller player in the mobile market and we'll see how it does in the enterprise sector. Hopefully Windows Phone with TPM will create demand from enterprise for other mobile OS'es to include TPM.
http://wmpoweruser.com/trusted-platform-modulethe-secret-of-microsofts-attack-on-rim/
Pre-dating the Dark Reading article SKS indicated in a CC that TPMs would flourish on phones at a surprising rate in the fairly near future. Maybe that changed?
I presume Wave has tried this angle and hasn't found any takers. If they already had an enterprise network, they would be in a stronger negotiating position.
TPMs for enterprise use on smartphones is not competitive to the MNOs SIM architecture the way secure element is.
Think virtual smart card and BIOS (UEFI) integrity for a smartphone, exactly like for a PC including notebooks and tablets. This is why the enterprise customer will eventually demand TPMs from device makers and MNOs. There needs first to be scale enterprise TPM deployments on PCs for enterprises to require it on smartphones.
Windows Phone 8 already has a firmware TPM baked in, I believe MSFT just has to release the APIs and someone like Wave can build support. MNOs allow these devices in their networks today.
http://en.wikipedia.org/wiki/Windows_8_phone
I don't believe MNOs are resisting TPMs I think it's more a matter of the device maker incorporating it which I believe they will when enterprise customers demand it. TPMs are for the security of the enterprise, not for commercial purposes.
Actually TPMs do have a prospective use in securing consumer user ID onto the device, but that comes later after the enterprise industry deploys them.
"Billings is one of these things. Also note that one key driver of increased billings was Safend. Not the most exciting element."
Safend and sale of SED management to a significant customer:
The increase in billings increase principally reflects the benefits of higher sales activity from Safend and an early maintenance renewal coupled with new data loss protection and self-encrypting drive license purchases by a significant customer.
http://www.wave.com/buzz/pr/wave-reduces-q3-net-loss-lower-expenses-revenues-63m-q3-total-billings-71m-exceed-q2-and-yea
Very nice alea.
Comments:
"Demand pull model."
Yes I believe it's growing for enterprise TPM deployment. A central question for me remains; since TPM deployment requires the customer to deploy a PKI infrastructure which historically enterprises have been reluctant to do, have Wave tools been developed to make PKI deployment and maintenance virtually transparent to IT (the IT dept.)?
"Evolutionary small steps rather than large architectural ones."
For better (good to have now) or worse (was a drain on resources) the Wave product suite in terms of TPM and SED support has already taken large architectural steps. This is one reason why Solms and Conte see the sales potential right now.
"End of Wave as a vanity project"
"Focussing on becoming a realistic commercial entity."
There's no doubt Wave's primary focus since Dell began shipping software in '06 has been launching the enterprise business. Whereas TvTonic was developed at this time and later Scrambls, the company realized the enterprise space was where Wave trusted computing solutions would be monetized so the enterprise business became the priority. Trouble was that SKS was an enterprise solutions sales/marketing neophyte and he was unable years ago to delegate full control of this to someone else highly qualified, and as a result the company's finances floundered. I did not think this would happen following GM, BASF and BP but it did.
The word "billings" was used repeatedly. I like that.
I assume Steven hired him.
Got my billings uptick...$1.2m worth
"The facts are that Intel makes several different lines of SSDs. Of the total, some are the Pro 1500 series referenced in the PR. Of those, only a subset having a certain firmware version support OPAL. Of those that support OPAL, ALL are ALREADY provided with the management capability software, developed by Intel."
Without researching the Intel Opal drives I will tell you that all Opal drives ship with OEM-based ability for basic functions including being able to authenticate to the drive so that the machine boots up and the drive encryption works. Where Wave and other third party vendors come in is for the enterprise management capabilities the OEM (in this case Intel) doesn't provide.
"Once again, Wave has only succeeded in getting their bloatware into the box."
There is no indication Wave is in the box. They may have provided fee-based engineering to Intel in designing the Opal firmware, but there is no indication in the PR that Wave is in the box and receiving royalties.
"This deal likely cost Wave a few million dollars"
I doubt that. As I indicated Wave may have been a paid consultant in the design of the Intel firmware but any cost to Wave would be in building their own support for the firmware and I doubt that would be significant.
Each Q1 and Q2 billings= $5.9m
Q1 billings= $5.9m
Q1 revenue= $5.8m
http://www.wave.com/buzz/pr/wave-reports-q1-revenues-58-million-and-reviews-recent-developments
Q2 billings= $5.9m
Q2 revenue= $6.7m
http://www.wave.com/buzz/pr/wave-q2-%E2%80%9913-revenues-rose-16-vs-q1-%E2%80%9913-67m-increased-software-bundling-and-services
Hoping for a billings uptick Q3.
Thanks dig. Very informative...sounds right on all counts eom
I see your point tkc, but wouldn't that method for reporting maintenance revenue be standard for software vendors? Multiple year contracts would have to be ratably reported allowing for the customer to back out of the contract?
I edited an addition at the end that post suggesting that as the mass of active licenses increases maintenance revenue becomes more quantifiable on a per q basis. Don't know if that is a valid idea.
tkc, accounting is not a strong suit for me lol. I don't have a clue about billings becoming a long-term liabilities. Is this related to the customer potentially asking for a refund?
As for Wave collecting maintenance revenue on our estimated 500k active ERAS licenses I am not current on how paid up GM, BASF and BP are with these accounts representing close to half the 500k licenses. The $1.7m billing Q4 2012 had to be one of them. I thought GM purchased three years maintenance with their purchase of ERAS in two tranches but I don't know if BASF and BP did the same.
Total billings for Q4 ’12 rose to $9.3 million, an increase of 52% from $6.1 million in Q3 ’12, but a decline of 20% from $11.5 million in Q4 ’11, which included $1.7 million related to a single large customer contract. Q4 ’12 total billings include $1.7 million in maintenance fees for a large enterprise customer that will be recorded ratably over the three-year maintenance term through December 31, 2015. Q4 ’12 total billings included $1.7 million from Safend, as compared to $1.3 million in Q3 ’12 and $1.8 million in Q4 ’11.
http://www.wave.com/buzz/pr/wave-reports-2012-results-and-highlights-focus-enterprise-management-windows-8-tablets
My guess is that should active licenses grow into a larger mass such as a few million, maintenance revenue becomes a more readable number quantifiable on a quarterly basis.
I can see the challenge in breaking out maintenance income as it's not currently stated separately but I know from previously checking Symantec and McAfee (now part of Intel) filings that maintenance is a significant part of their income. I would expect Wave to break it out as active licenses grows to a larger mass? Btw the client software PwC bought also requires maintenance although these licenses were a lot cheaper than ERAS so the fees are less.
Maintenance income from perpetual ERAS licenses should be ongoing and continuous unless the customer retires ERAS and replaces it with another solution. This is because ERAS like any other perpetual enterprise software license requires updates from the licensor to keep the software current and fully functional.
I can't say it's a given that every ERAS license pays perpetual maintenance fees but assuming there are 500,000 active licenses @ say $7/yr. maintenance= $3.5m/yr.
I believe maintenance is generally purchased in 3 yr. contracts for the pricing. Q4 '12 had a $1.7m maintenance order from a large customer.
Thanks for going through the numbers.
A footnote to my point that the enterprise business has been Wave's focus, actually pre-dating Wave software shipping on Dell Optiplex desktops beginning '06, is that I now recall meeting Brian Berger at the '04 CTIA Wireless event at the Sands Expo here in Vegas and he has showing the newly released data sheets for the first enterprise servers, Embassy Key Management Server and Embassy Authentication Server. This pre-dated by almost two years the Dell bundling above and by almost three years Embassy Remote Administration Server. 2006 was also around the beginning of SED development a collaboration between Wave and Seagate.
"Excluding Dell and Safend, revenue has increased in all three regions in the first half of 2013. Which is encouraging. Especially as legacy maintenance income has decreased."
By " legacy maintenance income" do you mean maintenance fees for software licenses?