MASSACHUSETTS PERSONAL COMPUTER SECURITY DISCUSSED BY WAVE SYSTEMS CEO Berkshire Eagle Online - The new personal computer:

Security upgrade
The new personal computer
Wave Systems' Trusted Platform Module fosters user ease, protection
By Scott Stafford, Berkshire Eagle Staff


Sunday, January 28
LEE — Steven Sprague, president and CEO of Wave Systems Corp., wishes his laptop computer would work like his cell phone and intuitively know who he is and what he is allowed to do.

Largely because of his efforts and those of his colleagues at the company, his wish will soon come true.

After more than 10 years of development, business is about to blossom for the software development firm, as more computers are shipped with hardware and software that enables what is known as the Trusted Platform Module (TPM)."

According to Sprague and others, using a silicon chip and the software that enables it, the TPM takes computer security to a whole new level of convenience and encryption.

Dell, Gateway, Intel equipped with software

And Wave is the company that developed the enabling software being shipped already installed in all Dell and Gateway corporate class PCs, shipped with Intel motherboards and installed on all TPM chips manufactured by four of the five chip manufacturers — Atmel Corp., ST Microelectronics, Winbond and Broadcom.

It also markets expanded versions of the software that companies can purchase to further secure sensitive information, with far more convenience.

"Finally, my PC will have the same level of security as my cell phone," Sprague said.

The problem, he explained, is that, as computers were asked to do more and more through the Web, the need to secure information grew as well. Now users are required to remember anywhere from a handful to dozens of passwords for a variety of Web sites and associated businesses, depending on how sensitive their transactions are.

Keeping track of all those passwords has become a burden and, in many cases, an obstacle to doing business efficiently.

According to Chris Cahalin, manager of network operations for Papa Gino's pizza restaurant chain, the need to protect sensitive financial information through the use of a variety of multilevel passwords became such an obstacle course that some district managers stopped carrying their laptop computers.

"Before, it was just a nightmare," Cahalin said. "Now those laptops have become a tool they can use again. I think the thing that's most impressive is that you don't have to baby-sit the process — it just works and works well."

Side effect: Decreased stress

Cahalin added that, as they deployed the new procedure, it had some interesting side effects: The ease of its use seems to have reduced the turnover rate of employees by reducing the stress level related to complex password requirements.

Sprague explained that the TPM system locks sensitive access codes into a virtual vault that is inaccessible to anyone other than the authorized user. The user must enter a biometric (fingerprint) and/or a password, and all other authorizations for that computer are automatically released, without sharing them with other Web sites or systems.

Sensitive information stored on the computer, and access to other systems through the network or the Internet, are inaccessible without the proper authorization.

Once the biometric password is given, there should not be any need for other passwords, unless the user wants to further encrypt the information.

"I log into my PC, and my PC logs me into the rest of the world," Sprague said.

"It knows I am who I say I am, and it releases those credentials," Cahalin said. "It's very cool, and it's really simple. It has given the device integrity again."

Used for corporate purposes

As more computers are shipped with the TPM system (more than 6 million have shipped already), its use will become more widespread, Sprague explained. It is currently used for mostly corporate purposes, but it will soon spread to the consumer market as well.

And as more people use TPM, more people will be looking to purchase the software upgrades to expand the program's abilities.

Wave is paid by the computer and chip manufacturers through licensing agreements for each computer shipped with their product included, and it will make money selling the software upgrades. It also will soon be making money from Seagate, a leading manufacturer of internal hard drives, for new, full-disk encryption software that will be installed on all its new drives.

"We're finally at a point where we're seeing widespread adoption by PC manufacturers and users," Sprague said. "Companies are starting to wake up and say, 'Oh, I have a TPM in every computer.' "

It has been a long wait. Sprague said that TPM has been in development at Wave since the mid-1990s, with roughly $300 million invested in the effort. The company has been publicly traded since 1994.
Today, Wave employs about 100, with 30 at the offices in Lee and others in New York City, Cupertino, Calif., and in France.
Difficult past

There have been some rough spots, including a 2003 SEC investigation of allegations of insider trading and a class-action lawsuit from stockholders reacting to those allegations. The SEC investigation resulted in no charges, and the lawsuit was settled in early 2006 for $1.75 million.

Today, all the headaches, development work and waiting for the market and technology to catch up with the trusted computing concept are about to pay off.

"Our funding has come from public market investors who believe this will work," Sprague said. "And now we're finally at the point where revenues will fund operations. We expect to be cash-flow positive by the end of the first half of 2007."

The level of security on most computers is expected to rise to a level as yet unseen, making information unreachable by the unauthorized and information theft a relative rarity.

"This system makes it incredibly difficult to steal information — outside of somebody with the resources of NASA — once it has been properly created and secured," said Rob Enderle, president and principal analyst for the Enderle Group and acknowledged by many as one of the most influential technology analysts in the world.

He said Wave is in a unique position as the company that makes the TPM system work.

"(Wave's) focus is on enabling the communication, not just on securing the communication," he said. "It's critical not only to individual security and corporate security, but to national, financial security. It is a specialty that is in high demand and technology that is more advanced than anybody else's."