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Foam, Nice DD! Another dot in the right direction.
Svenm
May1/Sep1, Great article!
Thanks!
Svenm
Alea, You wrote: "The success of Apple in the music business was, in part, that, somehow, Steve Jobs persuaded the rights' holders to let him define the song price low enough to generate volume."
I believe Jobs was helped by the fact that Napster-style downloads effectively reduced the price of music downloads to nothing. Jobs raised the price by eliminating the illegality. For various reasons (download size, purchase of encryption software, pernicious laws, etc.) the content people have been able to avoid, for the most part, the loss of their movie content in a similar fashion. Therefore, they can, and probably will, retain their stranglehold on prices for the foreseeable future. Jobs is fighting a much different battle this time around.
JMHO,
Svenm
Tony,
Good to see you post here! You're right, of course. But oddly enough, this time appears to be truly different! Wave actually has a product for sale that is being actively promoted in the mainstream press by two of the stongest tech companies on the planet. We know what their potential numbers are and we have a good appreciation for the revenues per unit that Wave should enjoy. Of course, what we don't know is whether Enterprise USA/Japan/Europe share our enthusiasm and desire for trusted computing. I'm happy to be betting on Dell and Seagate. It's unfortunate that the push by government is sadly lacking. By now one would have thought the DoD would be purchasing significant numbers of computers hardened with TPM's, using Wave's key management, and making it clear that encrypted hard drives are a big part of their picture. It won't be the first time that the government acts as the rear guard, IMO. I'm expecting a modest uptick in Q4, but that Q1 will be Wave's debutante ball!
Happy New Year!
Svenm
Forbes article on stepped-up Apple purchasing by the US Army. Some interesting info here. Svenm.
Thinking Different
Apples For The Army
Andy Greenberg , 12.21.07, 6:00 AM ET
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Worst Cybersecurity Meltdowns
Given Apple's marketing toward the young and the trendy, you wouldn't expect the U.S. Army to be much of a customer. Lieutenant Colonel C.J. Wallington is hoping hackers won't expect it either.
Wallington, a division chief in the Army's office of enterprise information systems, says the military is quietly working to integrate Macintosh computers into its systems to make them harder to hack. That's because fewer attacks have been designed to infiltrate Mac computers, and adding more Macs to the military's computer mix makes it tougher to destabilize a group of military computers with a single attack, Wallington says.
This past year was a particularly tough one for military cybersecurity. Cyberspies infiltrated a Pentagon computer system in June and stole unknown quantities of e-mail data, according to a September report by the Financial Times. Later in September, industry sources told Forbes.com that major military contractors, including Boeing (nyse: BA - news - people ), Lockheed Martin (nyse: LMT - news - people ), Northrop Grumman (nyse: NOC - news - people ) and Raytheon (nyse: RTN - news - people ) had also been hacked.
The Army's push to use Macs to help protect its computing corps got its start in August 2005, when General Steve Boutelle, the Army's chief information officer, gave a speech calling for more diversity in the Army's computer vendors. He argued the approach would both increase competition among military contractors and strengthen its IT defenses.
Apple (nasdaq: AAPL - news - people ) computers still satisfy only a tiny portion of the military's voracious demand for computers. By Wallington's estimate, around 20,000 of the Army's 700,000 or so desktops and servers are Apple-made. He estimates that about a thousand Macs enter the Army's ranks during each of its bi-annual hardware buying periods.
Military procurement has long been driven by cost and availability of additional software--two measures where Macintosh computers have typically come up short against Windows-based PCs. Then there have been subtle but important barriers: For instance, Macintosh computers have long been incompatible with a security keycard-reading system known as Common Access Cards system, or CAC, which is heavily used by the military.
The Army's Apple program, created after Boutelle's 2005 address, is working to change that. As early as February 2008, the Army is planning to introduce software, developed by Arlington, Texas-based Thursby Software, that will also enable Mac desktops and laptops to use CAC systems--a change that should make it easier to get Macs into the service.
Though Apple machines are still pricier than their Windows counterparts, the added security they offer might be worth the cost, says Wallington. He points out that Apple's X Serve servers, which are gradually becoming more commonplace in Army data centers, are proving their mettle. "Those are some of the most attacked computers there are. But the attacks used against them are designed for Windows-based machines, so they shrug them off," he says.
Apple, which declined to comment, has long argued its hardware is less hackable than comparable PCs. Jonathan Broskey, a former Apple employee who now heads the Army's Apple program, argues that the Unix core at the center of the Mac OS operating system makes it easier to lock down a Mac than a Windows platform.
And Apple's smaller market share has long meant that it didn't attract cybercriminals hoping to wreck the most havoc possible. "If you look at the numbers, you see that malicious software for Macs is very limited," he says. "We used to sell Apples by saying they don't get viruses."
Of course, cyberspooks may be honing their Mac-attacking skills, too. An end-of-year report by Finnish software security company F-Secure highlights the growing number of hackers targeting Apple systems with malicious software, some of which could allow cybercriminals to steal security passwords. In the past two years, until this October, F-Secure found only a small handful of malicious programs targeting Macs. In the past two months, the company has found more than a hundred specimens of Mac-targeted malicious code.
Charlie Miller, a software researcher with Independent Security Evaluators, worries that the Army's diversification plan isn't enough to thwart the bad guys. He sees a two-platform system as a "weakest link" scenario, in which a determined cyber-intruder will seek out the more vulnerable of the two targets. "In the story of the three little pigs, did diversifying their defenses help? Not for the pig in the straw house," he says.
The marketing pitch that Apples are inherently more secure than PCs is also largely a myth, contends Miller, who gained notoriety for remotely hacking the iPhone last August. He points to data gathered by software security firm Secunia, which showed that Apple had to patch nearly five times as many security flaws in its software over the past year as Microsoft (nasdaq: MSFT - news - people ) had to patch in Windows. Apple's Quicktime player alone, he says, was patched 34 times. "I love my Macs, but in terms of security, they're behind the curve, compared to Windows," Miller warns.
But the Army's Jonathan Broskey stands by his claims of Apple's security: He says the high number of patches to Apple software is a good sign--evidence of the large community of developers actively working to tighten Unix programs and eliminate bugs. Nonetheless, like any responsible IT department, he says the Army's Apple program will closely monitor security updates to Mac-specific programs. "The Army's no different from any corporation," he says.
Still, relative to corporate cybersecurity, Lieutenant Colonel Wallington points out, the stakes are much higher. A leaked deployment order, for instance, might reveal the path of a supply truck and the points where it could be sabotaged, he says.
"This is information that affects the lives of soldiers and the civilians we're trying protect," Broskey adds. "It has to be safeguarded."
Go-Kite, Outside back cover. Enjoy!
Svenm
Wildman,
Nice prediction! With that kind of accuracy I'm going to be paying attention to what you have to say about 4th quarter revenue!
Svenm
Internet, If I sang that around the house and Mrs. Svenm knew the reason behind it, I'd probably get packed off to the nuthouse! So instead of breaking into full song I'll just wander around muttering and whispering that refrain!
Cheers,
Svenm
Cliff,
I don't know if I'd waste the money buying a newstand copy, but just turn one over (the one with the Google cloud computing guy on the cover) and at least we can say to any significant others that we made the cover (back) of BW!
Svenm
Cooler, Dell's "World's Most Secure Notebook Ad", including plug for Wave, graces the full back cover page of Business Week December 24 issue. That's a pretty good wavoid Xmas present! Nice to see this starting to happen mainstream.
Svenm
Katmai, Did you ever get further information about your son-in-law's financial firm's security solution? If you did and posted it excuse my overlooking it, but I don't recall your coming back to the board with it.
Svenm
Eamonn, Bull, Thanks! Got it!
Svenm
Bull, Nice work! I can't download this off the IHUB site. Is there any way I can get a copy that I can download?
Thanks,
Svenm
Rachelelise, The numbers you suggested in this post are very close to the numbers I'm hoping for in those two quarters, though I doubt there will be much in the way of upgrades for Q3. I'd expect, given the late start on the drives, closer to $1.8M for Q3, but Q4 could still reach $5M. Because we've been burned so many times in the past, despite our "certainty", it's easy to understand the lack of optimism this time around. After all, for all the fine DD that's been done by members of these boards, our timing has been atrocious. Until the revenue spigots actually flow, I'm just ignoring anything that comes out of the Wave PR pipeline. Interestingly enough, things really appear to be different this time with the FDE drives being marketed by Seagate and Dell and Wave's contract in place. Paradoxically, Wave probably appears to be a better investment to newbies with less experience rather than to those veterans scarred by their losses. Hopefully February's report will be the turning point for this company.
Cheers, Svenm
Alea, Awk: Small point, but I agree with Awk here. As I recall, Dell's efforts to sell stand-alone ETS were half-hearted at best. Wavoids' "pinging" consistently revealed a Dell salesforce that was remarkably unaware of ETS. Either Dell never intended to really push ETS, or, more likely, their own market feedback revealed to them quickly that it was not a sell, perhaps for the economic reasons Alea has outlined in this discussion.
Hopefully Seagate FDE will change all this. Alea, you keep referring to the high demand for the Seagate drives. Do you have any concrete evidence of this, or is it based on deductive powers only?
Svenm
Snackman, This was the line I really liked in your article: "The best solution to both encrypting data at rest and providing an audit trail has just arrived on the market in the form of full disc encryption (FDE) hard drives. This summer, Seagate Corporation, the world's largest hard drive manufacturer, launched the first commercially available FDE hard drive for laptops."
Is the author a Wavoid? (maybe lol)
Cheers,
Svenm
Ramsey, Broadly speaking, I think my vision of how revenue would flow in the consumer arena matches yours. However, there is a detail that would need attending to: the consumer would have to be assured that the consumer service provider was trusted, as well. That would require a third party private certifying authority. There may be a role for Wave there. How reimbursement would flow is, of course, an unknown at present.
Cheers,
SVenm
Helpful, Nice effort! May I suggest you cc this letter to some key influential legislators that have a history of strongly supporting security efforts, whether because of personal philosophy considerations or political ones. I might suggest Joe Lieberman, for starters.
Cheers,
Svenm
Ramsey, Unfortunately, though it may be entirely possible to customize this machine with an FDE.2 it is not being offered as one of the standard choices.
http://www.dell.com/content/products/features.aspx/precn_m6300?c=us&cs=04&l=en&s=bsd
At least that's what it looks like to me just now.
Svenm
Toro,
Thanks for getting that reply from SKS!
Svenm
AWK, Ramsey--Thanks for both of your clarifications and for your continued work at enabling those less gifted of us able to follow this complex paradigm unfold!
Svenm
AWK, thanks! You've got mail.
Svenm
Weby, Thanks for the reply. I understand everything you mentioned, but the questions for me remain: How does VPro enable the archiving of the keys using KTM? And since this was formerly a task dependent on Wave server technology requiring a $50/seat upgrade and now appears to be handled by a 50 cent bundle, what are the compelling reasons for the upgrade? I still believe there are such compelling reasons, but it appears to me that at least one is no longer there. And though the PDF does include a pitch for an upgrade with a link to Wave (I assume, see p. 27), there is no reason given to the customer to click on that choice. So, once again, my questions: What happened with the KTM, and does anyone have a thought about what will push the client to perform the upgrade? I'm assuming in order to provide machine authenticity and integrity for the network, but is there something else and any thoughts about why Intel didn't include that in this presentation?
Svenm
NewWave, Thanks for that very interesting PDF from Intel which more than anything else is a primer on using ETS bundled version. I note that on p. 17 Intel recommends that the keys be archived. And the primer then proceeds to show how to accomplish this. A question I have here is where do these keys get archived in the VPro environment? The Embassy Key Transfer Manager handles this task, but my previous understanding was that would require server services from Wave server software. That doesn't appear to be the case. Then, on p. 27 the user is directed on how to upgrade to the full ETS, but it is not apparent to me what additional services are actually then provided and why that would be important. I assume that the upgrade will provide strong authentication as well as PC integrity, but is there something I'm missing here and is the KTM now residing solely on the end user machine?
I apologize for the probably sophomoric question but I'm a little confused by this presentation.
Svenm
Ootomy, You could be right, but I doubt it. From the article: “Seagate would be extremely sensitive,” said an industry executive who participates in classified government advisory groups. “I do not think anyone in the U.S. wants the Chinese to have access to the controller chips for a disk drive. One never knows what the Chinese could do to instrument the drive.”
I suspect that it is a genuine move toward a Seagate purchase, that Watkins is using the opportunity to get some great PR for his company and especially hardware encryption. And though it may be possible that a high enough bid could get enough shares, I find it unlikely that the sale would be allowed to go through, given what happened with the CNOOK affair. If the scenario plays out like that it would be great for Wave. Given the effort and the great position that Wave has I would just as soon not have this much riding on a single spin of the dice. On the other hand, hopefully there is nothing actually in play and Watkins already knows that.
JMHO and ICBW,
Svenm
Internet,
It's definitely a possibility that hardware encryption technology may get some excellent PR from this play. If that were to happen and Seagate doesn'tget sold to a Chinese technology company would be terrific for Wave. On the other hand, if a Chinese company buys Seagate we can forget about FDE.2 drives getting into the DoD PC's (and can probably forget about enterprise as well) because of the obvious backdoor threat. To me this is a very bad development as the risk/benefit ratio is so poor. It reminds me of 9/11 when the EDS chairman was scheduled to give his big talk on computer security in Washington D.C.
Nevertheless, the DoD has a lot of skin in this game already and I suspect that a lot of pressure is going to be applied to keep this sale from taking place. Hopefully it will help to jumpstart our rollout.
Svenm
Uh oh! Chinese technology company is seeking to buy Seagate.
http://www.nytimes.com/2007/08/25/business/worldbusiness/25drive.html?hp
Svenm
New Wave, My interpretation was a little different. I took it to mean that off the cuff Steven expected a 1/3 ratio of FDE.2 drives by Seagate to those that were bundled and upgraded with Wave's software. Naturally, IHBWB&CBWA!
Svenm
Wash, A belated thanks for all your reporting from the Earth City event as well as your latest "nugget." Real reports from actual people involved in this rollout are often worth a lot more than any number of blogs, articles and conjectures by all kinds of pundits.
Svenm
Unclever,
Thanks for putting that together. It looks like as good a reason as any for the sagging stock price. Now we've got another 3 months to wait for Q3 and the first peek at TDM and full upgrade revenue!
Svenm
Weby, Good thumbnail of our present situation re: future value. 80% sounds high, 10% sounds low to me. My very arbitrary guess would put us somewhere close to the middle of those two on the enterprise side and probably higher on the government. But just for argument's sake a 33% adoption of server services of a million drives per quarter would be about $70M per year. That would get us up to a S/P of $30 using a conservative P/E of 20 and our present 50M outstanding shares. That's reasonable for 2008 and may even be conservative.
JMHO,
Svenm
Doma, Thanks for the great work! It's great to see it in black and white on Dell's site!
Svenm
Architect, Good one!(lol) Perhaps you can send your design to Boeing, Papa Gino's and Airbus! Should be right up your alley with your background.
Svenm
CM, Thanks. Gotta like the second presentation's slide #33: "Trusted Computing is Going to Happen"! Is Potter Weets in drag?
Svenm
CM, I agree with you on this:
"But I would be happy just to have the government take a STRONG PUBLIC role in embracing the standards and implementing the technologies. One could say that the Army's adoption of TPMs is an example of the advocacy we all need. But we need more than that.
but not on this: "There need to be legislative mandates and regulations... I think."
The effect of major government TC deployment and usage, by virtue of its demands on private vendors, and then their vendors (Weby's dominoes, remember) would suffice. Ham-fisted government regulation, capricious in nature and subject to the lobbyist du jour would almost certainly not benefit Wave.
JMHO,
Svenm
Helpful, Thanks for posting that article again. I missed it before and it is definitely worth the read. My own take-home message from it, though, is that probably we will be resigned to slow (at best) traction until the relevant government agencies start using our software. ICBW and the Seagate drives could preempt that scenario (and certainly in my worst-case doomsday assumptions there will be enlightened enterprises that will be the exception) but for a broad-based move I see a government mandate as necessary. Sort of like the law about driving on the right side of the street.
Svenm
June, As Wave starts selling ETS upgrades I would think (techies correct me if I'm wrong) that the bulk of new hires will need to be in software support to interact with clients. Hopefully this is the beginning of that process.
Svenm
SL, Thanks. Good to hear that we're beginning to populate the real world.
Svenm
Flyer, My enthusiasm has been tempered over the years, but I still hope you make enough on this investment to buy yourself an F18!
Svenm
Doma, Let's hope so (that it's doable, that is)! Thanks for the clarification.
Svenm