on24 interview of steven sprague

Beginning Of Smart Card Adoption In The US
September 27, 2000

This is ON24 On The Move, I'm Mark Lichtenfeld

ON24: Wave Systems is one of the presenters at the annual Smart Card Forum meeting September 27th and 28th in San Francisco. Here to talk about the role of Wave Systems in the world of smart cards and where that industry is headed is Steven Sprague, CEO of Wave Systems. Thanks for being here Steven.

SKS: Thank you for having us.

ON24: So tell us what you are seeing so far at the Smart Card Forum. The focus is mobile e-commerce... so what are the trends you are seeing develop and what will Wave Systems' role in that be?

SKS: Well first the bulk of the conversation today at the Smart Card Forum has been about mobile platforms. Really the concept that there are a lot of now mobile devices that either include a smart card chip like all the European cell phones and now some of the US phones and ultimately where they are going with Personal Digital Assistants and other devices like that to do mobile e-commerce. So that's been the general topic of conversation today at the Smart Card Forum.

ON24: Okay, And what's Wave Systems' role in all that?

SKS: Wave's role is that we are building security that can either go into the phone or into ultimately a smart card reader that would enable programmable security to work in conjunction with the smart card. So one of the challenges with a smart card is for example entering your PIN number securely to unlock the smart card and we can help assist with the technology of that.

ON24: What are the challenges for you to come up with the technology that enables people to use the smart card?

SKS: The challenge has been a flexible platform. There are so many different devices and different pieces of infrastructure all which are using different standards. And so one of the real advantages that Wave has been able to overcome is a programmable platform that will utilize all the different standards and all the different supports for smart cards. So, we really play a supporting role in smart cards, we aren't trying to displace smart cards. We're trying to augment the security of smart cards.

ON24: And is the technology that you're creating the same or similar to what you would use on the web and in other applications?

SKS: Yes. We're showing a Compaq keyboard that we've built with Compaq that includes our security chip and also a smart card reader. So that you can type in your PIN number for the first time securely or log into a web site, because we're able to intercept the key strokes and encrypt them and send them to the server directly instead of having the operating system be able to view what you've typed and compromise your password or PIN number.

ON24: Smart cards are much more common in places like Europe, overseas, when do you envisions that they become commonplace in the United States?

SKS: I think we're just seeing the beginnings of smart card adoption in the US. Certainly what American Express has done with their blue card, the recent announcements that have been done by VISA and others to show their smart VISA program which has been advertised as part of the Olympics. So, we're seeing the beginnings of the introduction to the US. In Europe they are very broadly distributed. Countries like France have over 1 billion smart cards in distribution. Actually our major business in smart cards is in Europe with a group called Cyber Comm where we are supplying the sort of e-commerce terminal in the home that is both the smart card reader and a security device that can support different types of music or video or other services that are delivered.

ON24: So what kind of deals do you have in place to take advantage of it domestically once it does become commonplace?

SKS: Our primary relationships domestically are with the PC manufacturers. We have a relationship with AMD to include our security processor on motherboard architectural designs. We'll be showing those later on this year. Really to enable the home consumer to have all the benefits of this strong security both with and without a smart card in their home PC.

ON24: And, with these deals, is AMD and similar companies, are they just paying you a flat fee, a per processor fee for this? How does that work?

SKS: No. Actually, the business model here is. Wave has developed a general purpose security co-processor. So what it does is, we can load and unload applications into this chip that take on different personalities. So one minute it's a music system and the next minute it's a pay for view video system. We make money not on the silicon but actually on the distribution of these applets. So we have a recurring revenue stream that occurs from the distribution of these applets.

ON24: Finally, from what you are seeing at the forum, who else is a winner in this space right now?

SKS: I think it's a complicated space. There are certainly the major players in smart cards, companies like Gemplus and a number of others who have a very strong presence in the smart card space. But they're still wrestling with the fundamental value proposition of how do we get the card readers deployed and the cards out there. We think we can help with that and it will be interesting to see how it continues to evolve.

ON24: Well great, next time you are in town we hope you will come by and see us again.

SKS: Thank you very much.

ON24: Steven Sprague is the CEO of Lee, MA based Wave Systems. That's what's On The Move, I'm Mark Lichtenfeld ON24.