Interesting article about Wave in PC Week magazine.
Toll Booth By Robert L. Scheier; PC Week
Peter Sprague was irked. As National Semiconductor's longtime chairman, he found himself culling an on-line service for sales intelligence. And his nine searches kept him connected long enough to ring up a hefty $2,900 in access charges. The bill was so big that his own people hung up on his request for a 10th search. But that wasn't all that annoyed him. "I haven't gotten $2,900 worth of information," he remembers thinking. "I've gotten $290 worth."
That was in late spring of 1988. Fast-forward to fall 1993. The world is abuzz with talk of the torrent of data that will roar down the "information highway." But nobody has figured out how to charge customers for the information they really want, rather than making them pay for every bit and byte that either pours out of a broadcast service or resides on a CD ROM.
Nobody, that is, until Sprague.
He's the 54-year-old CEO and chairman of Wave Systems Corp., a 4-year-old startup in New York now beta testing a new and possibly revolutionary PC technology to meter information usage. Just how revolutionary? Put it this way: If enough information providers and PC makers go along with Sprague - a big if - the Wave system could become the information-age equivalent of the ubiquitous household electric meter.
Think of it as an intelligent utility meter. At its heart is a single-chip decryption solution with a microprocessor and non-volatile memory on board. The chip resides in a PC, PDA, or even a PCMCIA card. Its function? It unscrambles encrypted data from a CD ROM drive or a cable or wireless broadcast. Even more, it debits information usage against a prepaid account - stored right there on the chip - established with a content provider. Users simply replenish their accounts by connecting through a modem to a credit-card company. The concept, in short, is this: Instead of metering usage at the head end, as on-line services do, you track it at the point of consumption.
The big advantage? It frees users from mounting connect charges. But the chip holds even more promise for providers. Assured that they'll be paid for it, they could offer more data via CD ROM, cable, or even via wireless broadcast.
"You could put the last five years of the Wall Street Journal and the Financial Times in the [PC] box for nothing," Sprague claims. "Nobody is going to put valuable information out on a cable or an RF [radio frequency] line if they can't figure out what happened to it." Eventually Sprague sees the Wave technology being used for everything from renting video games to charging just for the "Doonesbury" comic strip, not the entire electronically delivered morning paper.
Sounds futuristic. Sprague insists, however, some vertical markets are ready for plucking. His first targets are accountants and law firms, including several that are testing the Wave system. A lawyer might not be willing to shell out $10,000 for a seldomused CD-ROM containing every section and subsection of each state's legal code. "But he might pay you on a per-use basis," says Richard Black, vice president at Personal Library Software Inc., a Rockville, Md. provider of full-text retrieval software that is co-marketing the Wave system.
Sprague hopes to do nothing less than create an alllanes toll booth for the information highway. Then again, grand ambitions are nothing new for him. He's done everything from run for Congress against former New York Mayor Ed Koch (he lost) to managing the largest cold-storage food plant in the Middle East. By education, he's not a technologist: he studied political science and economics. Yet he went on to obtain two technical patents - one for a projection television tube technology and the other for coming up with the concept of metering a scrambled broadcast data stream, key to Wave's plans.
As National's chairman for the past 28 years, Sprague has kept a low profile. But his background there gives Wave a decided advantage. National is licensed to manufacture the chip. And its former president and CEO, Charles Sporck, is among an impressive group of investors who have ponied up more than $6 million since Wave's founding in 1988. Others: Bob Laff, the co-chairman of distributor Merisel, Inc., George Conrades, a former IBM marketing executive, and George Guilder, the author and futurist.
Wave's business plan is to break even on the encryption software and the decryption/metering chip. The real profits, Sprague says, will come from royalties as customers access data. Wave wants to charge information providers roughly 35 cents on each sales dollar. Sprague says the company is willing to offer as much as half of its take to PC makers as an incentive to install the chip on their machines and on their computing devices.
Even at that, though, nobody knows whether Sprague can convince PC vendors to build in the Wave chip. Sprague says Hewlett-Packard Co. will ship a Waveequipped PC next summer. (HP declined comment.)
Sprague isn't just pioneering a new chip, though. He must also create an infrastructure consisting of information providers and PC makers who will use the Wave technology. What's more, Alan Reiter, the editor of the Mobile Data Report, warns that Wave has yet to prove it won't make information too hard or too expensinve to retrieve.
As for content providers, Andrew Elston, the president of NewsNet Inc., an on-line information service in Bryn Mawr, Pa., says his company has expressed an intent to work with Wave, but nothing more definitive than that.
Nevertheless, he's hopeful. "It seems like a dream come true," he says of the chip. "If Wave can pull this off - and they seem to have the connections to do it - it could be a significant enhancement of the whole environment for information retrieval."
Resume; Peter Sprague
Age: 54
Title: Chairman and CEO of Wave Systems Corp.
Education: He received a bachelor's degree in political science from Yale in 1961. He also studied political science at MIT and economics at Columbia University.
Career: He began working as a UPI photographer and correspondent in Moscow in the early 1960s. Established the biggest chicken farm in Iran. Has also served as a hands-on chairman or director of a variety of businesses, including National Semiconductor, Advent Corp., Aston Martin PLC, Caesar's Palace, and a chain of home-furnishing stores. Produced the 1974 movie, "Steppenwolf."
R&R: He enjoys skiing, scuba diving, and flying.
--------------------------------------------------------------------------------
HTML markup by Brad Cox (bcox@gmu.edu) |
