Explains Paul Boutin on Wired News :
At its simplest, Palladium provides a tamper-proof vault for data on the desktop. “One of the areas the PC needs to grow in is its resistance to certain kinds of attacks,” said Geoffrey Strongin, platform security architect for AMD.
Those attacks include Web-based cracking and viruses, ripping CDs, modification of application programs, and sniffs of users’ passwords and other personal data, according to Strongin. “The constraint on the problem is the existing PC marketplace,” Strongin added. “We don’t want to throw out trillions of dollars in infrastructure.”
As a result, he said, Palladium was designed as an extension to current PC hardware and software, one that would allow existing software and hardware to work as usual, while enabling new applications and hardware that work with encrypted data inside the PC.
In theory, the Palladium system would be safe from any attacks short of physically opening the box and tapping into the hardware.