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Technology Stocks : WAVX Anyone? -- Ignore unavailable to you. Want to Upgrade?

To: Golden Bear who wrote (7872)	7/5/1999 9:09:00 PM
From: John	Read Replies (9) \| Respond to of 11417

IMPORTANT RE: WAVE and Short Attack! I have read the short attack arguments, especially the Visa/MasterCard debate and I would like to clarify Wave's business model because people sure don't seem to get it. I have been a consumer marketing executive for the past 20 years and the following information is meant to offer a balanced look at how WAVE is positioned in the consumer market place. First let me say, WAVE IS NOT A CREDIT CARD SOLUTION. They have created a PATENTED way to sell Digital Content securely to the consumer by setting up distribution systems via OEM partners. Their process is interesting because it allows for a very flexible pricing solution that is based on time or units used. There out right purchase model is capped at 80% so no one buys for full price as an extra benefit. They get consumer distribution and INSTANT CREDABILITY from their OEM partners who LOVE the business model because they can now make money after the sale. Here is some rebuttal to many Short arguments: The most common mistake with the short argument is they assume everyone who has digital content for sale does so via a “Direct to Consumer Business Model”. WRONG!!! Think about how most people shop. The majority wants convenience and broad selections. Look at AMAZON.COM, they sell a lot more than just books. So why do the shorts think all companies want to sell direct, which is the only way the VISA argument works. 1. WAVE IS NOT COMPETING WITH VISA/MC/AMEX. They are not trying to make money under the same business model. The shorts are NOT comparing apples with oranges. The EMBASSY chip is more like a retail store selling/renting DIGITAL products to consumers (e.g. BLOCKBUSTER VIDEO). But in this case, the WAVE store is built right into the product they just purchased (e.g. PC, STB, WinTV card, etc.). Wave makes money from their security features via royalties and profits from the sale/rental of digital products offered initially via “Bundling” and “Wave Direct”. 2. HOW CAN I SAY THE EMBASSY CHIP IS LIKE A STORE IN THE CONSUMER'S HOME OR OFFICE? WAVE gets their Digital Product at Wholesale and sells it for retail. The big difference (and why Digital Content Providers are not hard to get) is Wave could have over 100 million stores (EMBASSY CHIPS) distributed around the WORLD in the next 5 years by simply riding along with the products made by their already announced OEM partners. You tell any software/movie/music company you are going to open MILLIONS of stores and you will see a STAMPEDE to your door. Try saying 100 million and….well you get the picture. 3. WHY SHOULD DIGITAL CONTENT PROVIDERS SUPPORT WAVE'S BUSINESS PLAN? The MP3 revolution has proven that Digital Content needs protection. It is too easy to pirate digital products and it is costing companies BILLIONS today. They are all extremely nervous about selling digital content and welcome a solution. WAVE is really a storefront for DIGITAL content providers, kind of like a “Blockbuster Video” business model except the rentals and sales take place in the home or office. In this case, EMBASSY is the storefront where SECURE business takes place. 4. CONTENT PROVIDERS CAN SELL DIRECT AND MAKE ANY WAVE PRODUCT LOOK EXPENSIVE. Sure they can, but most companies rarely sell direct to consumers due to cost restrictions, even on the Internet. Most companies want to sell their products to consumers via some form of retail/Internet distribution system (e.g. Music Stores, Video Rentals, Movie Theaters, Amazon.com, etc.). Think about it. If given a choice to have your product sold on the HOME SHOPPING NETWORK or go it alone and sell direct, which would you choose? You go for the biggest distribution option possible. WAVE is not HSN, but as the deployment numbers grow, they could easily dwarf HSN. 5. I NEED PROOF WAVE WILL DEPLOY EMBASSY? Look at WAVE's press releases for the past year and you can see all the bases are covered and the distribution numbers could be staggering. Especially with the potential for the EMBASSY to be a STANDARD security chip embedded into everything capable of downloading and storing/purchasing digital content. And don't forget the PATENT, which makes the past transaction example WAVE owned. All that want to use the same method will have to pay royalties! 6. VISA CHARGES THEIR VENDORS 2-3% AND WAVE CHARGES 40%, HOW CAN THEY COMPETE WITH VISA? This is my favorite argument that makes NO SENSE. Visa's customer is the consumer and WAVE'S customer is the Digital Content Provider. WAVE is like millions of new stores opening up virtually overnight, offering digital content companies a means of selling their goods to millions of people in a SECURE area. Even more secure than any physical store with electronic monitoring devices because if someone breaks into a WAVE store, they get one person's inventory and credit card number. Not thousands of pieces of inventory like a typical brick and mortar store. It gets even worse for Internet “Server” based stores; you not only risk the entire inventory, but the thousands of credit card numbers from YOUR CUSTOMERS as well. 7. SOFTWARE E-COMMERCE IS SECURE ENOUGH AND EASIER TO DEPLOY. The big problem with downloadable security solutions is two fold. The time for downloads is too long today which means most people skip the process. Plus, security with software is suspect and the quantity of loss is staggering when Hackers go nuts. Re-read #6. Don't believe hardware is more secure than software, than you need to speak with ANY true security expert and they will tell you hardware is hands down a better way. 8. CYBERCASH HAS PROVEN THERE IS NO MARKET FOR MICRO-TRANSACTIONS. I love this argument too. Many people tried to invent the airplane, but only the “Wright Brothers” figured it out. If we all stop trying, then I will be worried. Besides, CYBERCASH made the mistake of positioning themselves against VISA/MC. They have been trying to fix it ever since, but I don't think they will survive as we see them today. 9. NO ONE WANTS MICRO-TRANSACTIONS. First, go read Bill Gates book, “The Road Ahead”. He speaks often about the way the Internet will transform into a “pay-as-you-go” medium. Maybe there will be two Internets. One with advertising and the other a pay-as-you-go. The trick is getting the technology widely accepted by the consumer. In WAVE's case, they have taken the OEM pre-install method which takes time, but is the best way to achieve success. They had problems here until the security issue became a hot topic and MP3 awoke the dangers to the Music Industry. Plus, margins have squeezed so tight that any OEM is searching for alternate profit centers. WAVE is a perfect match, but has to go through a chicken and egg scenario. That is why the IBM endorsement and Hewlett-Packard security additions were so big. It covered all the bases and gave HUGE credibility to the task of wide scale deployment and acceptance. Having INTEL validate the need for hardware security didn't hurt either. 10. PEOPLE WON'T TRUST WAVE. Pretty silly that a consumer would not trust a company ENDORSED by the same company they just purchased from. The shorts don't seem to think that “guilt by association” cliché means anything. However, I believe most consumers feel if they buy a Hewlett-Packard product and WAVE is inside, trust is usually implied. Not everyone fits this scenario, but the vast majority does! 11. WAVE IS TOO DIFICULT FOR PEOPLE TO UNDERSTAND UNLESS THEY ARE TECHIES! WAVE is really nothing more than a SECURE store for DIGITAL content providers that is pre-loaded into the device purchased. Kind of like a “Blockbuster Video” business model except the rentals and sales take place in the home or office. [Example introducing WAVE to consumers: You open up your new EMBASSY equipped PC and inside the box you are introduced to WAVE. The first thing you see is a bundle of CD/DVD “JEWEL” cases filled with the hottest games, music, video and software. You read on. A Welcome to WAVE book is inside and you are introduced to the next generation of DIGITAL purchasing/rental, right in the comfort of your home or office. If you don't like to read, a short presentation is automatically played during initial start-up of you new PC and BOOM, the WAVE story is unveiled.] 12. WHY DON'T WE HEAR DIRECTLY FROM THE OEMs THAT THEY ARE DEPLOYING? Well that process has just started with WinTV. It's only a small beta test designed to get the bugs out and come up with FAQ; they will surely follow up this beta test with a full rollout soon. Regarding the PC makers and other devices EMBASSY is designed to support, we should hear from them anytime now. As most people know, PC OEM's never announce new products until just before shipping. The reason being, they do not want to mess with sales of product currently on the shelf or tip their hands to competitors. WAVE has already stated more than once that the second half of 1999 and first half of 2000 is the rollout time frame. Want more clues? Re-read all the press releases and the outcome is very obvious, the future is upon us with WAVE and the deployment schedule is happening right now. Well I have posted a lot of different viewpoints than what the shorts are saying and apologize for the length of this post. I have owned WAVE for many years and intimately understand their vision and I hope the information I have provided will help some people make better decisions on whether to buy or sell. Good luck to all…..John