Wave Systems Corp. (fka WAVXQ)

[RootOfTrust]

Some thoughts for a weekend...

A poster recently referred to my "relentless positivity". Yes, I am more positive than ever, but I don't imo put a positive spin on this investment just because I have tended to be historically positive like many other longs...I too, like a few who appear to be jumping ship today, would also get out now if I believed Wave was in a stalemate (or worse) position. I'm afraid to say I no longer read the posts of several longs because it's a waste of my time to read content that still harps back to "orders in hand" or "could have sold 100K drives yesterday". Whether comments like those by Wave were simply hyperbole, intended or not, or something different, Wave's situation is today what it is, progress is tangible, and my strategy continues to be; gather information on what the company is doing NOW and use that information to determine whether to stay with the ionvestment, vs. complaining about any past mistakes the company has made.

Progress is tangible, and the potential moving forward is clear:

1. Wave's customer base has been initialized and is growing. Dell FDE has helped kick it off and I am forcasting that the solution is gathering momentum. If Dell can sell 120K drives/Q and Wave can attach 80%+ ERAS to that volume, that would be the approx. 100K ERAS seats that Wave needs to add to licensing revenue to B/E @ $7.5M/Q...and this would be with zero TPM management sales.

2. As Wave's FDE customer base grows, all of these customers are potential buyers of TPM management seats. Today many of them are approaching or have 100% TPMs in their installed base. As they continue to buy FDE drives w/ ERAS on new platforms, it will become more clear to them on the value of using their TPMs. Wave is in a better position to upsell an existing customer than to upsell one not yet in the customer base. But there will also be TPM only Dell customers (not yet in Wave's FDE customer base) who want to implement their TPMs but are not yet moving into FDE, and they will become Wave customers. It's only a matter of time before a Dell customer with a significant TPM installed base, and there are now SO many of them, makes the decision to buy a large block of Wave server software to manage their TPM seats. Not only is Wave Dell's TPM partner and an utterly logical choice for the Dell customer to use, but Wave is the only ISV anywhere that can provide a full TPM management solution to the enterprise (and FDE management as well).

3. Enterprise interest in TPMs is finally gathering momentum,

http://investorshub.advfn.com/boards/read_msg.asp?message_id=27997184

http://investorshub.advfn.com/boards/read_msg.asp?message_id=28007614

(Thank you Foam)

which is a perfect fit for Wave just at the time that Wave finally has an initial and growing customer base of FDE customers. We should remind ourselves that Wave is after all the TPM software provider for Dell, and Dell is far and away the largest enterprise/government PC OEM globally. This means as Dell enterprise and government customers become more interested in using their TPMs, they will have at their disposal a free pre-installed version of Wave's full enterprise version of ETS (except for Trusted Drive Manager which will still be withheld from the suite to be bundled only onto an FDE drive for an additional Wave royalty). Previously Wave withheld KTM (Key Transfer Manager) client and the 23 multiple secure vaults features from the bundled Dell ETS, but as of the new Dell licensing agreement, those features will now be bundled as well, meaning the Dell customer who wants to upgrade to the Wave server software no longer has to negotiate an upgrade with Wave to the full ETS client (it will already be bundled by Dell). KTM client is an especially important component of ETS because without it, the KTM server (EKMS) can't be implemented.

4. Wave confirmed to me in a recent e-mail that the original 2006-2007 Dell customer evaluators of TPM management are still in the pipeline. Why there was so little traction 2006-2007 in TPM management sales will remain an enigma until history makes available the details. I think Wave was just too early and several factors come into play...remote adminstration, insufficient penetration of TPMs into the installed base, lack of FDE drives, waiting on NAC, low awareness in the industry. I don't think Wave's failure in 2006-2007 was poor salesmanship or for lack of trying...they were just too early.

So yes, I remain positive going forward, but not on a hope and a prayer...instead I state some facts above. And on a note on the trading and SP, I believe we are witnessing shares being sold today going into the hands mainly of the SRA clients who remain long and are averaging down from last May's 2.05 placement as well as the earlier more expensive ones. These guys don't want delisting to become a reality and ultimately have some control over that and also know that news does as well...so basically today's daily trading range is the lowest the price can be given the sub-1.00 issues, and where accumulation and averaging down can continue for a certain amount more time.