Wave Systems Corp. and VLSI Technology announce strategic licensing agreement; VLSI Technology to design and produce the WaveMeter — first "vending machine" on a chip enabling secure transactions at the desktop

Business Wire, March 7, 1995

SAN JOSE, Calif.--(BUSINESS WIRE)--March 7, 1995--Wave Systems Corp. (NASDAQ:WAVX) and VLSI Technology Inc. (NASDAQ:VLSI) today announced a strategic licensing agreement to collaborate on the design and manufacture of Wave-enabled encryption chips for targeted markets such as electronic commerce.

As part of the agreement, VLSI will design and manufacture the chips that support Wave's WaveMeter technology for use in computer systems and peripheral devices such as CD-ROM drives. Designing Wave technology into systems enables decryption and measurement of the usage of software information.

In addition, VLSI will design customized chips that utilize the technology to meet specific requirements of various systems and hardware manufacturers. Sample parts will be available in the second half of 1995.

"We're excited to be working with Wave; their WaveMeter technology is an important product element for our customers who are concerned about secure corporate information," said Neil Shea, director of secure information technology for VLSI Technology Inc.

"The Wave System is one of the first solutions that enables secure commerce at the desktop. These products are applicable for a broad range of platforms such as set-top boxes, PCs and servers. This technology will be an important component in VLSI's overall secure technology offerings."

VLSI's long history of experience in the design and manufacture of high-performance, high-complexity integrated circuits enables an effective and practical solution to the growing problem to secure information.

"The WaveMeter provides, for the first time, the opportunity for hardware manufacturers to receive ongoing income from information that passes through their devices. This creates an important new revenue stream for those companies that are facing an increasingly competitive marketplace," said Peter Sprague, chairman and chief executive officer of Wave.

"The WaveMeter makes new business models possible, including software rental, rent-to-own, try-before-buy, and most importantly, pay-per-use. The system's efficiency and flexibility allow consumers to purchase what they want at a price they can afford while providing publishers with a new model for information distribution."

The Wave System

The Wave System provides a secure solution for making purchase transactions at the desktop. The Wave System, a hardware-based information metering system, combines data encryption/decryption, secure integrated circuit technology, and sophisticated transaction processing systems for application to CD-ROMs, on-line services or satellite broadcast.

Information providers and software developers distribute their products in encrypted form to consumers, who purchase and decrypt such information on an as-needed, per-use basis. Pricing and sales models are determined by the vendor. Secure funds in the form of a credit balance are loaded on a WaveMeter and purchases are debited against the on-chip account.

Periodically, transactions are automatically downloaded to WaveNet, the back-end processing center where usage reporting and feedback are generated. Additional credit is then uploaded to the consumer's on-chip account.

The Wave System benefits content providers, consumers and hardware vendors. The system protects information providers and software developers against unauthorized usage and enables them to increase marketshare through greater pricing flexibility. Consumers benefit by having increased access to information and software which can be made available at lower cost on a pay-per-use basis.

Hardware vendors share in the revenue stream created by the sale of information through the WaveMeters.

VLSI Technology Inc. (NASDAQ:VLSI) designs and manufactures application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs) based on its library of functional system blocks (FSB). Targeting its offerings toward the computing, communications and entertainment marketplaces, the company offers its customers advanced system-level integration capabilities.

The company is based in San Jose, with 1994 revenues of $587 million, and has approximately 2,700 employees worldwide.

Wave Systems Corp. (NASDAQ:WAVX) provides new methods of electronic information delivery that benefit both publishers and consumers. Founded in 1988, Wave Systems Corp. has 40 employees and is headquartered in New York.

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Note to Editors: WaveMeter and WaveNet are trademarks of Wave Systems Corp. FSB is a trademark of VLSI Technology Inc.

CONTACT: Wave Systems Corp.

Amelia Burkhart, 413/274-1400

VLSI Technology Inc.

Greg Kaufman, 408/434-3070

The Weber Group

Hazel Kochocki, 617/661-7900