SKS' Consumer/Subscriber/DRM Remarks:
(First, thanks to Unclevername, as always.) Here in one post are the relevant excerpts that I obliquely referred to in a post last night. This is SKS pointing toward the future... "subscriber management"... Wavexpress... bundled "services" not just content. I think we all need to take a long look at this stuff. It's BY NO MEANS a new topic for long-term Wave-holders. We used to talk about how everything was about the NETWORK of users and having access to that network via customer-facing apps, etc:)
"... Our relationship with Microsoft and the Windows Media Center project through WaveXpress, where now the WaveXpress engine is part of Media Center's Online Spotlight, which allows us to bring services to the Media Center PC. And connecting those services ultimately to Trusted Computing we think will give us a very interesting experience in subscriber management on the consumer platform. You'll see more from us in the future on that. We have a great relationship with a number of different content providers with WaveXpress. We think long-term, and this is certainly something that Wave's talked about extensively over the years, we think long-term that subscriber management is a very interesting business as it relates to Trusted Computing. When you have millions of users out there, how you help them have access to the content and services that they want to have access to, because that builds the value for the long-term business model of building a recurring revenue stream from the platforms that are shipped.
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Tim Baxtram, Private Investor: Hi, Steven. Wave started out as a company that was focused on protecting premium content and it's now evolved into more of a trusted architecture and software provider. I'm curious looking forward do you foresee any real role for recurring revenue from the protection of premium content and Digital Rights Management or is Wave focused now just on providing the underlying architecture to support those activities?
SKS: So let me answer it in the following manner, I think that the business right now is in providing the underlying infrastructure and architecture to support Trusted Computing. I think that's what the market needs today and what we can get paid for. As the volume of Trusted Computers grows in the marketplace, I think there is definitely an opportunity for a services business to support the aggregation of, I won't just use content but services in a broader sense, in essence to certain aspects of digital identity. And that's the next phase of the business which is around, if I had, you know, look at the upper end of the spectrum, if I had 500 million people in the network, we as end users want to aggregate services, it's a natural thing. We don't want to have a separate business account at every hardware store; we want a VISA card that I can use everywhere. I don't want to pay a bill for HBO, Showtime, ESPN; I want a cable company that aggregates content. So it's a natural tendency towards aggregation.
I think that the support is around subscriber management in really the broadest sense, as opposed to content protection. I think that content protection is most likely, not most likely, it will definitely get eventually solved. I don't think it's going to get really dramatically changed any time in the near future. And so realistically our focus today is, how do I ensure that the subscriber to a service actually paid, and that only the subscriber gains access, as opposed to worrying about the continuous copy protection of content, which I think companies like Apple and Microsoft are going to work to solve. I don't think the business is in copy protection; I think the business is in subscriber management. I think that's always been true. It's been a challenge in our early stage of our business was how are we going to get hardware on a billion machines. I think that's one piece of the puzzle that's starting to get solved.
Now can you put your brand on every machine, can you expand that brand to deliver services to every machine and let that market grow to scale. And that's clearly where we are focused. We have tremendous depth of experience in our previous business that puts us in a fantastic position to realize this. We've got to keep our heads down. We've got to keep building the plumbing and infrastructure, because that's where the money is today. But we certainly have not lost our vision for what we think the broader market is. And we'll continue to pursue that. I think that you can see little pieces of that around what we're doing with WaveXpress and Online Spotlight, even aspects within the digital signature side and eSign; how do I build services backed up against these identities?
Baxtram: When you say, when you refer to a subscriber management, I assume you're talking more about selling Wave's software and infrastructure to the companies who have the subscribers rather than attempting to sell software to the subscribers themselves. Is that right?
SKS: I'm not so sure that I would limit it yet. I think the first step is build a set of infrastructure and tools you can offer others. But that doesn't eliminate the potential that Wave could be one of the operators as well. I think that business is completely open. I think the market is going to go ship millions and millions and millions of Trusted Computers and I think there are very few companies that are focused on what you do with the installed base of Trusted Computers. And Wave gets up every morning, and our sole focus is how do I help that installed base grow, how do I make money off the growth of that installed base, and what the heck do we do with it once it's on everybody's machine. And so I think we're in one of the best position in the marketplace to have participation.
If the business model becomes one of helping to aggregate and manage a direct relationship with the subscriber, it's not necessarily supplying software to them; it's equivalent to managing a service infrastructure. That service infrastructure can be as simple as "how do I help a PC company manage its customers to its customer service system," which would be sort of an enterprise role of it. Or, a more sort of classic consumer model would be, "how do I aggregate a collection of content that only these consumers can access." Both of those are really similar technology. I think clearly one's going to happen before the other. But that's the potential of this market is to drive to a recurring revenue stream off of the relationship with the end user. If Wave is able to get to that point, this is a tremendous business. Because the scale is awesome.
Kitchen: And just a last thing, on the Online Spotlight from Microsoft, any color as to how you guys get paid on that or maybe what, just some expectations in general?
SKS: So today we offer services that are ad supported. We've had multiple hundred of users download the TVTonic application. It's interesting because the next conversation after you get into after Online Spotlight is talking to all the PC manufacturers about adding Online Spotlight to their machines. So we think that's a nice hand and glove fit with where we are on the Trusted Platform side, but it's an advertising based revenue stream. In the early stages of this, for the approximately million unit installed base of Media Center PCs, it's all about understanding how people want to use that platform. Examples of things that we do today are an application, if you have to go, it's a little hard for people to see this, if you have to go buy a Media Center PC in order to see any of this... We do an application where we identify which movies are playing, for example, on Showtime with trailers and so you can watch the trailers of the new movies that are going to be on Showtime, you can then pick the trailer, and it automatically in essence does a PVR [Personal Video Recorder] of that movie when it comes by. So it's very cool, and you can get advertising revenue from the people who want to have their media watched more.
So it has some very interesting models. We are receiving advertising revenue off of it today. Obviously the dollar values are pretty small in this space because the total installed base is pretty small, but clearly television is an advertising supported medium and this fits right into that model.
It will be interesting to see how this grows as you bring it a subscriber management capability to it. I think there are some very interesting capabilities there. But we're just in the early stages of convincing them that every Media Center PC ought to have a TPM in it. "
