Wired.Com Article About WAVX... FWIW...
PC Meter Meets Its Maker
by Chris Oakes
5:03amÿÿ29.May.98.PDT
Wave Systems Corp. (WAVX) thinks you won't
always want to buy software. More and more, rather,
you'll want to rent it.
Proof is in the Internet, the company says, where
content is supported by advertising and (some)
pay-per-view. Similarly, the future's dominant software
and content business model will be supported on a
per-use basis, not outright ownership.
On this reasoning, Wave is equipping PCs with a
usage meter -- the built-in ability to track and bill a
consumer's use of content and software. WaveMeter
is the company's proprietary hardware-based system
for measuring, controlling, and billing the use of
electronic content for this purpose.
"It's a piece of hardware in your computer," said Wave
Systems president Steven Sprague. "Using a dial-up
connection and your credit card, you put money on
the meter."
To get this technology under the hood of consumers'
PCs, the company announced today that integrated
circuit-maker Standard Microsystems Corp. (SMSC)
has licensed the technology to build WaveMeter
technology into its chips.
Users of PCs with meter-equipped Standard
Microsystems chips will thus be able to purchase
pay-per-use or rent-to-own entertainment, education,
and software titles. Wave Systems says it has
partnerships with some 30 consumer software
companies offering game and family software titles,
such as Red Storm Entertainment, McGraw-Hill Home
Interactive, and GT Interactive.
With metered usage, these publishers see lower
marketing and distribution costs, along with the ability
to reach new users not interested in buying software
outright.
Consumers meanwhile can pay for software and
information based upon actual use in incremental
amounts. If it's a software title, the payment system
might be something like $1 or $2 per day, capped at a
total expense of 80 percent of the retail purchase price.
(At that point, the user would own the software.)
But Wave Systems has been trying to advance its
ideas in hardware for over four years now, with no
successes to this point. For the fiscal year 1997,
revenues were a mere US$11,000 for the company, with
a $16.4 million loss.
Some observers think there's a reason the company
has yet to make money on its technology.
"I don't perceive a considerable consumer pull for the
applications this technology will be used with," said
Jupiter Communications analyst Seamus McAteer, an
opinion echoed by another analyst, Zona Research's
Vernon Keenan.
"Overall I'm pessimistic on metered content. Like
micropayment, it relies on capabilities built into the
client -- i.e. the user's PC. That needs to be widespread
with a critical mass," Keenan said.
Part of the lack of interest on the part of consumers,
McAteer believes, is an aversion to monitoring
technology built into their PC, be it a smart-card reader
or a usage meter. "I don't know if people are
comfortable with that notion."
Nor does McAteer see the pay-as-you-go market.
Consumers, he said, like to own. "There is a real value
in ownership." Part of that value is the consumer's
ability to take their time in getting to know a piece of
software, he said.
As far as the Internet being proof of the pay-per-use
model, McAteer says such content has been a small
part of Web use, and primarily confined to
pornography publishing. Even there, he said, "I don't
know if people are gong to want to have a chip on
their motherboard for pay-per-view porn."
These negatives are why these analysts see a niche
application at best, though Keenan believes that if
Wave Systems can achieve the all-important critical
mass, with PC manufacturers building the technology
into PCs, it may have a chance.
Wave is relying on the field-of-dreams, "if you build it
they will come" philosophy, he said. But in this case,
he points out that there are several parties that have to
build it -- from chip suppliers like Standard to PC
manufacturers to software companies, including
Microsoft Corp. building metering APIs into its
operating system.
When there are that many builders involved, Keenan
says new technologies such as the WaveMeter
usually don't achieve the critical mass they demand.
Still, Wave Systems recognizes that ubiquity is the
name of the game for such technology to work, and
hope that today's announcement is the beginning of
such a trend. And that will depend on PC
manufacturers opting for the added cost of
WaveMeter in the motherboard circuitry they
purchase from Standard Microsystems. Sprague
estimates that the cost for manufacturers will come in
at an acceptable, sub-$5 per PC.
Standard Microsystems is a sizable partner too,
supplying integrated circuits to PC-makers worldwide.
It shares the market for such chips primarily with
National Semiconductor. Wave Systems' Sprague
believes Standard Microsystems' hardware is found in
30 percent to 40 percent of the PCs sold.
The initial plan calls for Standard Microsystems to
build the metering capability into an input/output
motherboard device it supplies to PC manufacturers.
Independent of the CPU and the operating system, the
triple-DES-encrypted technology is very secure,
Sprague said.
To sweeten the pot for manufacturers opting to order
meter-enabled hardware, the Wave licensing
arrangement lets them draw a percentage of all
pay-per-use revenue.
"You have to be pervasive on the desktop before you
can introduce a client security solution," Sprague said.
"This helps us get the technology broadly deployed." |
