[davb]

It's a shame to see that they used the goodwill of security-conscious cryptonerds to gain a foothold on the market only to, effectively, say "We're now targeting enterprise and government who can afford to pay for third party contracting security auditors. You can't, so just take our word that it's secure."

Other companies have managed secret distribution for secure devices just fine - randomise the card manager key and bundle a tamper proof packet containing the key along with the product. Provide instructions on how to verify the integrity of the packet, and confirm a digitally signed affirmation of the key against Yubico's public key online.

That's more than RSA offers for SecurID seed verification and more than my business bank offers for two factor device PIN integrity checking.

I'm not sure who they use for their Secure Element (NXP?) but it also sounds like Yubico has gone along with their request (and NDA) to keep implementation details secret. We've seen a similar situation in SE implementations in mobile phones (for contactless payment, primarily).

Again, enterprise customers don't care (mid-sized one have insurance that will cover loss if their Common Criteria EAL 5+ vendor's hardware is compromised, big enterprise can pay for auditing). Governments don't care (they'll pay for auditing or negotiate it in any significantly high volume contract).

End users and the tech community are the only groups who'll really lose out here.