[ISN] PGP has been *sold*

From: InfoSec News (isnat_private)
Date: Tue Aug 20 2002 - 05:37:24 PDT

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    Forwarded from: Aj Effin Reznor <ajat_private>
    By Sandeep Junnarkar 
    Staff Writer, CNET News.com
    August 19, 2002, 8:26 AM PT
    PGP Corp. is setting out to do what Network Associates couldn't --
    entice enterprise customers to buy PGP encryption products by making
    them easier to use.
    On Monday, Network Associates sold its Pretty Good Privacy (PGP)  
    encryption products to PGP Corp., a newly formed company.
    The deal gives the new company a line of encryption products based on
    the PGP algorithm, including PGPmail, PGPfile, PGPwireless,
    PGPkeyserver, for the Windows and Macintosh operating systems. Network
    Associates will retain some products developed using the PGPsdk
    encryption software development kit, including McAfee E-Business
    Server and McAfee Desktop Firewall and VPN Client.
    The financial terms of the agreement were not disclosed.
    PGP Corp., formed in June, said Monday it has raised $14 million in
    funding from venture capital firms Doll Capital Management and Venrock
    Associates. The company said that funding would allow it to acquire
    and upgrade the product line and develop new technology "focused on
    improving PGP's ease of use."
    The company said it has sufficient reserves to reach operating
    profitability without additional funding.
    That forecast may prove overly optimistic, however. Although millions
    of consumers use the technology for encrypting e-mails, Network
    Associates found PGP products a tough sell because of an enduring
    perspective of it as freeware. Even after the company stopped offering
    it at no cost, the software spread across the Net at free download
    Network Associates started selling PGP products to corporations in
    1997, but commercial demand was weak as companies worried that the
    added complexity would make the information they e-mailed inaccessible
    to some recipients. In March, Network Associates stopped marketing
    "You are faced with the situation where usability is traded off
    against security--the more usable something is, the less secure it is.  
    That cuts to the core of why we acquired the assets," said Phil
    Dunkelberger, PGP's chief executive. "We talked to many senior people
    at large corporations who all said they would use the product if we
    could make it easier to use. So we're focusing on making a much
    easier-to-use product."
    PGP Corp. hopes that a new line of products it announced on Monday
    might improve the demand. The company announced new products that will
    ship in November 2002, making it fully compatible with operating
    systems such as Windows XP and Mac OS X.
    PGP 8.0 for Windows gains full Windows XP support as well as a
    server-side Lotus Notes plug-in. The new Mac version, the company
    said, has Mac OS X support and allows compatibility with PGP disks
    created on Windows.
    "We are going to take our knowledge of both client and server-side
    software and in the future build on that to create a much
    easier-to-use secure messaging architecture. That's the business plan
    we took to the venture community," said Dunkelberger.
    The technology's shift from Network Associates seems to be a step in
    the right direction, analysts said.
    "They have a better chance of adding enterprise functionality than
    Network Associates had," said Ray Wagner, director of information
    security strategies at research firm Gartner. "PGP appears to be (PGP
    Corp.'s) only focus, whereas Network Associates acquired PGP mostly to
    use the base product in their server offerings."
    There are increasing signs of a burgeoning market for e-mail
    encryption products. Analysts point to companies like ArticSoft which
    have sprung up in the past year.
    "I don't think there is anything coming down the track that is going
    to push PGP out of the limelight as far as becoming obsolete," said
    Wagner. "It's certainly got a several-year window of opportunity."
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