cnbc - power lunch

Wave Systems (Wavx) CEO Steven Sprague On The Company's Future Growth
August 23, 2000

SUMMARY: Sprague speaks about the company's future growth prospects. Sprague discusses a keyboard built in collaboration with Compaq (CPQ). Sprague comments on content control and Internet security.

Tyler: Moving along, shares of Wave Systems are trading higher for the second day in a row. After signing a major deal with Compaq yesterday to develop secure keyboards. Wave Systems makes hardware that helps digital content providers distribute information on the Internet. For instance, its products can help clients deliver music, video or other graphic content over the desktop and then allows for secure electronic payments, as well. Here to tell us more about his company and the growth prospects moving forward is Wave System's President and CEO, Steven Sprague joining us from San Jose, California. Good to see you.

SKS: Good to see you. Tyler: Let's begin with the deal you set to announce yesterday with Compaq for a secure keyboard. What does this do and how soon there this keyboard be available to the likes of you and me?

We demonstrated the keyboard yesterday that with built with Compaq over the last now six months. The keyboard was originally built for an application in Europe to do secure financial transactions over the Internet and its first availability and testing is under way in France. What we showed yesterday was that because this keyboard is programmable for security we added interoperability called TCPA, the trusting computing platform alliance standard for this keyboard. The objective is for the first time, add trust into the client-side devices on the network.

Tyler: Does this mean most security has been taken care of the server side, now you are putting it on the desktop?

SKS: That is correct, one of the important things to happen to the Internet is the move from the security from the center of the network to the edge of the network. By putting the trust at the edge of the network we really solve the security problems that are plaguing the Internet. Content control and distribution for music and video all the way through to how do I log onto my trading account and have the Internet provider know for sure it is me logged on to the network.

Tyler: Is this basically a chip product?

SKS: Yes, a hard wear device that goes into the keyboard, we are working with AMD to put this into the mother boards where it is programmable for security. We can support many of the application providers. Companies like Intertrust who do music protection can write an application that runs with the chip that gives security to hide secrets.

Tyler: Let me change gears a little bit. I have an email question. Interesting question I noticed George Gilder is on your board of directors and what is his involvement of the daily business. George Gilder, of course one of the big writers and thinkers about the new technology.

SKS: George is great. I will see him on Friday. We have a board meeting on Friday. George is a very active board member in the company and this technology is absolutely critical to enabling the security at the end point of the broadband networks. So, George has been very helpful in providing relationships and alliances to the major broadband players and providing a good understanding of how the technology of bandwidth is exploding.

Tyler: Let's go to another email question, this one from the U.K. will the announcement with Compaq positively accelerate the thought process for Embassy, which is a main chip product and with other main OEMs? Quick answer.

SKS: We think so. The real challenge here is the deployment of hard wear to the edge of the network and Compaq's endorsement of our product and the demonstration of its flexibility because it is programmable device helps with a variety of different devices. We see the beginning of strength into the set-top box and broadband space as well.

Tyler: Steve, thank you for joining us.

SKS: Thank you.

Tyler: Cool to get questions from the U.K., isn't it?

SKS: Absolutely.

Tyler: My thanks to Steven Sprague, president and CEO of Wave Systems.