Replies to post #134524 on Wave Systems Corp. (fka WAVXQ)

[Weby]

Nick
There should be no reason for a public lynching. You have stated pretty clearly what has always been the ultimate unknown in this drama.... the ultimate position of end users in the end game. And, of course, initially many if not most of the market will take the cheap and easy way out. The question is how that cheap and easy is framed by the journalists and THE LAWYERS.

Security is an insurance cost. The machine insurance and the data insurance have costs either way. You may well be right that the uptake is going to be sloggish at best, but you may also be wrong. There are a lot of pressures to improve both system security and the appearance of system security -- pulls and pushes.

Military security
liability issues growing
slow growth of e-commerce until ID theft fear diminishes
Policy enforcement
DRM

Wavoids problem is not the long term adoption or ubiquity. Our problem is first ROI of the burn rate and then earning money in $40 million dollar chunks to support dollars per share in earnings. half a chunk gets you to 50 cents or double digits so the crucial question is where do we get 20 million dollars above the break even license fees. Well, that depends on whether "dollars not pennies per unit": means 2 dollars or 12 dollars. NOBODY has anything but guesses at this point including Dell and Wave.We were told that there was SERIOUS INTEREST from some potential clients.

My point is that with an enterprise base of 100 million machines and one or two percent producing 2 million times 10, while your assesment made me concerned....I have to believe that even minimal uptake SIGNIFICANTLY raises both the share price and the ability of the company to continue to grow... and that's without Awk's numbers which rely on a significant uptake of the whole system by a million or so trusted drive users at a full upgrade of $50 a machine.

We won't know the numbers until 2008, but we should be able to projecta more or less than multi=million dollar uptake by enthusasm of the press, the adoption by other OEMs, and the progress of the other parts of the system.

As usual, the real numbers will almost certainly be better than the bashers and less than the KaBoomers, but there is absolutely no reason to think that growth of revenue shouldn't accellerate to breakeven and beyond based on even a small fraction of what will be a 100 million machines plus market in a year or so......especially when one considers that the industry leaders adopted the standard not for secureities sake, but to profit from opportunities it presented for DRM,web services, and expanded markets. The glass IS getting to the half full place where we can all be optimists even if pessimism is a hard habit to break. In any case, this is not a lynching, because I think you have asked the most critical question...What will the adoption curve really look like a year from now?

[goin fishn]

Nick- A far more pragmatic and interesting view than those who would poke sharp sticks into SKS. Your last paragraph delineates the key challenge that Wave now faces. Will companies and IT managers take the cheap, quick dirty way out of their security issues, or will they go with what should be the gold standard?

It's an all too human tendency to put off facing problems and spending the money it will take to solve them properly. That's why the DoD will be so important, if we can get the contract. It'll force contractors to use TPM security.

It's also why Seagate is so important. It puts us right in front of people, instead of us being just one choice of many. It also gets them using keys, and confronting the necessities of managing them. If Seagate wants to squeeze us a bit, so long as we don't just give it away, I say do the deal. Get people using their TPMs, and we will eventually profit.

These initial bundling deals have never been where Wave has been going, anyway.

[zen 88]

nick- The IDC thinks differently:

http://www.itbusiness.ca/it/client/en/home/News.asp?id=41396

In referring to Seagate's FDE-

Charles Kolodgy, research director of security products for IDC, agreed that this approach to encryption will likely become a standard, particularly for enterprise laptops.

You make an interesting negative counter-point, but I'd rather have the opinion of the IDC backing up my position.....

[RootOfTrust]

nicknamen, your points:

I have never heard Wave say or imply Seagate will bundle TDM only for free. Show me where you saw that. If you go over the CC you'll see it's mentioned three times that Wave is expecting TDM relationships with both their OEM partners (currently Dell and Gateway) AND Seagate. I am predicting a Seagate 8-K for TDM. It's become clear IMO that Wave is better off to make TDM available directly through the major PC OEMs, as distributing only via Saegate would tend to commoditize it, so I would agree with your point that Seagate does not want to lock in a long term TDM bundling cost on ALL of their drives as that could be an issue with competitors' pricing. However, what you may not have considered is that initially FDE drives will be a premium product, priced higher non-FDE drives, therefore the additional cost for the software is not a big issue since most of the additional premium will be in the hardware.

I don't know where you get your notion that Secude key management solutions for FDE drives are cheap. Frankly I don't know what Secude costs, but the Wave TDM part of the FDE drive package will be pretty darn IMO cheap at say $25. How can $25 for software be expensive, when most of the premium for the FDE drives will be in the cost of the drive? So, if the FDE drive is say $140 more than non-FDE including the Wave software, show me the comparison to Secude. So, if the customer wants to pay the premium for the Seagate FDE drive but not use it with their TPM and instead use the non-TPM Secude solution for managing their keys, what does the Secude software cost per seat? I don't know. The whole issue of Wave vs. Secude on Seagate FDE is really the issue of the enterprise implementing TPMs or not implementing them. The fact is, the Secude solution only makes sense if there are no TPMs in their network (pretty unlikely if they are buying new machines) or if they are not yet going to the additional expense of using their TPMs. So, I concede to your point that some will take the cheap way out and use Secude instead of implementing their TPMs and use TDM, but then at the same time they are paying a premium additional cost for the FDE drives. Frankly I think the Seagate strategy is mainly to see TDM distributed with the drives, and they will do the channels Wave's OEM partners don't. However I will concede there could be orders where the drives will go to users who plan on using Secude, in which case no TDM would be distributed.

As for your HP comments, I think you may be uderestimating the significance of the Wave interface going forward as more Dell customers implement their TPMs using Wave. Some of those customers may have HP also. And of course the government...if Wave wins enterprise-wide mandates, HP will have to look very closely at implementing Wave...may just be cleaner for HP to adopt the ESC interface.

[RootOfTrust]

nicknmaen, here is the Secude product for Seagate FDE:

It's called TiDoCoMi, and I can't find it among their products listed, so it may be yet to be released. Anyway I don't know why you think it's so darn cheap compared to TDM...how can anybody make that assumption? As I said in my last post, if a buyer of the Seagate FDE drive was to pay at least $100 more just for the hardware, they are already spending a premium just for the hardware. So, what kind of savings exactly would be the Secude software vs. implementing TPMs including perhaps an extra $20 (my guess) paid to Dell for TDM?

Here is the Secude/Seagate demo at this fall's Storage Newtworking World.

http://www.secude.com/htm/386/en/News-Detail.htm?News=9576

Here is the Seagate DriveTrust announcement that mentioned both the Secude and Wave solutions demoed at Storage Networking World. We know the Secude solution is non-TPM and Wave's is TPM. Btw, while Secude is a TCG member, if you do a TPM search at their website you get zero results.

http://www.seagate.com/cda/newsinfo/newsroom/releases/article/0,1539,3347,00.html

Storage Networking Industry Association Solutions Center
Seagate and software partners SECUDE IT Security and Wave Systems, leaders in delivering computer security solutions, will demonstrate state-of-the-art data security for notebook computers using Momentus 5400 FDE.2 in single-user and enterprise deployments.

So what might be the cost comparison of implementing Secude's TiDoCoMi with a Seagate FDE drive vs. a full Wave server-enabled TPM implementation with a Seagate FDE drive?

Well, we don't know what TiDoCoMi costs. We do know the full Wave enterprise suite including server licenses nets Wave about $50, so figure $100 cost to the user plus I want to guess another $20 for TDM to the user ($10 for Wave from Dell)...for a total w/ TDM of $120/seat...obviously just a ballpark guess. Frankly I don't think these costs would be considered outrageously high against existing non-TCG solutions. As I mentioned in my previous post, the issue for an enterprise re: Secude vs. Wave is TPM implementation vs. not using their TPMs. I really think Dell and Wave are offering a cost structure that is competitive with existing non-TPM solutions.