He has shown to be able to alter the contents of Drake's machine to his own advantage, to the point in changing his own image and voice to match that of Hailey before attacking Neku himself and changing the whole arena to that of a molten river, leaving Neku stranded on a fairly large rock.
He has even show to create a labriynth in order to slow down Hailey who he was sent to stop before he had to worry about other matters that he had to then attend to.
The true nature of what Soundwave actually looks like has not been established as of yet.
Soundwave reteated to New Peenemunde Harbor and killed or forcibly evicted all of the Dragonstorm personnel stationed there. He then turned it into a station loaded with robots and set it to work on completing the Hydra.
When James' team came to destroy him, and successfully destroyed his diamontanium armor, Soundwave attempted to retreat again onto the internet. However, ROSS, an AI whom Soundwave had tried to destroy in Drake's machine, trapped him and battled him to the death. After admitting he could not kill Soundwave directly, ROSS incorproated Soundwave into his own software and then deleted himself, destroying his former admin with him.
MrDrake has stated that he had gotten the idea for Soundwave from the original Transformers cartoon, even using his monotone voice as Soundwave's voice as well.