Wave Systems and NTT DATA Sign Alliance MOU
 for EMBASSY® Technology and Services in Japan

Lee, MA, USA and Tokyo, Japan — January 23, 2006– Wave Systems Corp. (NASDAQ:WAVX www.wave.com) announced today that it has signed with NTT DATA Corporation (TOKYO: 9613.T) of Japan a non-binding memorandum of understanding (MOU) to form an alliance to resell Wave’s EMBASSY secure software technology for the trusted computing market. Under the MOU, the parties envision the formation of a distributor and systems integrator relationship to resell Wave’s products and solutions and to provide support services to its customers in an effort to introduce such products and solutions to the Japanese enterprise market. Trusted computing markets in Japan that may be addressed by the alliance include financial services, government, health care and consumers.

Wave’s EMBASSY trusted computing features include network policy management, data protection, password protection, strong authentication — including machine, biometric and smart card authentication of a user’s personal computer to a server — and encrypted email.

"Wave’s EMBASSY trusted computing technology and services solutions address a wide range of security bringing customer value to businesses and consumers today, including authentication of identity and data protection," said Hitokazu Tanabe, senior vice president and senior executive manager, Business Solution Sector, NTT DATA. " The market for security and solutions, such as Trusted Computing, has been accelerated by the Japanese Data Protection Act. There is a growing demand for quality secure solutions in the Japan market. Our intention is to work with Wave in Japan as our preferred partner for innovative trusted computing solutions. We will discuss cooperation with the solution based on the VANADIS architecture which our company provides."

"Wave is delighted to be working with NTT D ATA to help address the many personal computer security issues — including identity and data theft, phishing and insecure passwords — that challenge businesses and consumers every day," said Steven Sprague, president and CEO, Wave Systems. "We believe our broad range of solutions from single client to enterprise-wide server solutions will give users important tools to have a more secure and trusted computing environment."

Wave’s EMBASSY software is designed to support the next generation, security chip hardware called the Trusted Platform Module (TPM). The computer industry has shipped millions of PCs embedded with the TPM chip. Wave has designed its EMBASSY technology to take advantage of all commercially available TPMs.

This MOU is a non-binding expression of the parties’ current intentions. Both parties hope to complete a definitive agreement by the end of the second quarter of this year.

More information on Wave’s EMBASSY secure software is available at www.wave.com .

“VANADIS” stands for Vertical Advanced Network Architecture for Dynamic Enterprise IT Strategy. It is an IT infrastructure construction service developed and supplied by NTT DATA based on a unified architecture that is designed for the integrated management of individual in-house systems used by companies and other organizations, including IP networks, IP phones, e-mail, portals, and electronic decision approval.About NTT DATA Corporation
NTT DATA traces its roots back to 1967, to the establishment of the Data Communications Bureau within Nippon Telegraph and Telephone Public Corporation (present-day NTT). The Bureau sustained consistent growth based on system development, building, operation, and maintenance across a broad front, ranging from nation wide systems that formed the cornerstones of society to a multiplicity of corporate network systems. In 1988 it began a new chapter in its story when it became NTT DATA Corporation.

Today, NTT DATA has grown into a group comprising 100 subsidiaries and affiliates. It possesses comprehensive strengths and has the best track record of any system integrator in Japan. It harnesses these many strengths to engage in business that is in keeping with its two priority management policies: “Enhancing the Competitiveness of the System Integration Business” and “Creating New Businesses.”

In an information network society, it is not enough simply to increase business efficiency and make daily life more convenient. NTT DATA is committed to using IT to shape the affluent society of the future, a place where information can be accessed at any time and in any place. For more information about NTT DATA, visit http://www.nttdata.co.jp/en/index.html.

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About Wave Systems Corp.

Wave is a pioneer in hardware-based PC security that provides software to help solve critical enterprise PC security challenges such as data protection, strong authentication, network access control and the management of these enterprise functions.  Wave is a founding member of the Trusted Computing Group (TCG), a consortium of more than 100 companies that forged open standards for hardware security.  Wave’s EMBASSY® line of client- and server-side software leverages and manages the security functions of the TCG’s industry standard hardware security chip, the Trusted Platform Module (TPM) as well as hard drives that comply with TCG’s “Opal” self-encrypting drive (SED) standard.  Self-encrypting drives are a growing segment of the data protection market, offering increased security and better performance than most existing software-based encryption solutions.  TPMs are standard equipment on many enterprise-class PCs shipping today and have shipped on an estimated 300 million PCs worldwide.  Using TPMs and/or SEDs and Wave software, enterprises can substantially and cost-effectively strengthen their current security solutions.  Visit http://www.wave.com for more information.

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Under the Private Securities Litigation Reform Act of 1995. This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company’s financing plans; (ii) trends affecting the company’s financial condition or results of operations; (iii) the company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors.

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For more information please contact:

Wave Media Contact:
Michael Wheeler
Wave Systems Corp.
413-243-7029
mwheeler@wave.com
Wave Investor Relations Contact
David Collins
Catalyst Global LLC
212-924-9800
wavx@catalyst-ir.com
Mr. Munakata
Public Relations Office
NTT DATA Corporation
Phone: +81-3-5546-8051
Japan Market Contact
Wave Systems
Richard Shuck — VP APAC
rshuck@wave.com

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