THE ENTERPRISE BUSINESS
There's still a lot of unfinished business for Wave in order to realize the full potential we've been long anticipating. I am referring to the barely scratched surface of enterprise upgrade business which I believe Wave needs to master before they'll have the strong brand recognition needed to introduce hardare based security to the larger consumer space.
New Wave, here are my current assumptions on the status and scope of Wave's enterprise business:
(All imho)
Note: All revenue figures assume $50/seat for ERAS (including the TDM royalty of about $7).
Wave offered specific details on their first group of post-pilot enterprise customers in the 2007 Q3 CC over one year ago. I consider that event to be the the "public launch" of Wave's enterprise business. The enterprise business has been growing steadily ever since albeit far slower than I noted earlier this year when my analysis hoped for 100K seats/Q by Q4. It now looks like Q4 could be 10% of that (see below).
I believe Wave now has something more than 100 post-pilot (FDE) customers...customers who order most or all new laptops with FDE drives. Customer network size varies from as few as less than a couple hundred seats to multi-thousand seats. Some of these accounts are activating some or all of their TPMs either in pilot activity or more broadly. In any case, most of the ERAS seats currently being sold are attached intially to FDE management with some seats attaching to TPM management subsequently or, in the case of customers who are post-pilot in TPMs, concurrently. Therefore in the case of TPM activity, some of it is actually occurring on non-FDE seats (laptops already deployed w/ TPM but no FDE drive).
The above current base of post-pilot FDE customers probably generates 3-4K seats/month ($150-200K/month). 10K seats for Q4 is a reasonable expectation. Look to 10K seats/month as a significant milestone ($500K/month) and for it to occur some month in Q1. Given that Wave now has a significant number of post-pilot customers, with more coming online regularly and that some piloting customers are large organizations, I consider it probable that large orders can and will occur at any time, generating "a first big month" of 20K seats or more ($1M or more for that month). It's a fair assumption Dell FDE sales volume is accelerating now that the faster speeds and larger capacity versions are available, together with the passage of time helping in customer awareness...these factors increase the probability of any customer (including very large ones) making the drives standard on their procurements.
2009 should be the year Wave begins selling signifcant enterprise product quantities to OEM and systems integrator partners for use in their own internal IT environments, including TPM management. 2009 in general should see a large increase in the TPM management side of Wave's enterprise business.
I won't attempt to predict the amount Wave's enterprise business grows in 2009 or attach revenue numbers to it. Assuming the OEM business will now provide B/E revenues which appears to the case, it's a fair assumption the enterprise business, however modest it's growth rate might remain, will provide the company with earnings. I can say however, I do think the enterprise business WILL become large, but as always, it's too risky to predict the timeline...lol!
P.S. According to my assumptions, Wave is approaching or has already surpassed their first 20K enterprise seats sold (first $1M in enterprise sales...a noteworthy milestone imo). In considering the average sold per customer, the reader should please bear in mind there hasn't been anything near, from day one, today's something like 100 post-pilot customers.
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