The demand for virtual private network (VPN) technology - a cost-effective tunnelling technology that allows users to transmit data more securely over the Internet - is heating up in the global market for network companies like US-based Shiva as export restrictions on encrypted technology relax.
As of June, Shiva began shipping its LanRover VPN Gateway - a remote access suite that integrates direct dial and VPN connectivity - to the Asian region, in an effort to gain a foothold in the global VPN market. At the beginning of the quarter, the US Department of Commerce eased restrictions on the company for exporting the 56-bit key-encrypted technology worldwide. The company's move into VPN technology accelerated earlier in the year after Shiva acquired Isolation Systems and its VPN technology for $US37 million as part of a strategy to combine its traditional dial-up remote access equipment with VPN technology.
During a recent visit to Hong Kong, chairman, CEO and president of Shiva, James Zucco, met with IDG Hong Kong's Megan Scott to explain the company's motives behind its move into VPN technology, and to discuss other remote access issues.
IDG: With your recent acquisition of Isolation Systems, it appears Shiva is positioning itself more aggressively in the VPN market. Why are you betting on VPN?
Zucco: The acquisition of Isolation Systems allowed us to wed VPN technologies - an Isolation development that had been shipping since April 1997 - with the historical strength that Shiva brought from traditional remote access. By leveraging the installed base with VPN, Shiva is re-establishing a focus. And, just as the Internet is the next network, VPN is the utilisation of that next network for remote access.
Originally, when remote access was introduced, it was very costly and with the proliferation of laptops, travel, mobile computing, teleworking, social trends and pollution, we have pushed remote access as well as the Internet into the forefront. Since the average long- distance phone call is two to three minutes while the average remote access long-distance call is 40 to 60 minutes, remote access users are finding that adds up to real money. Customers are going to want connectivity at a low cost and VPN is simply the promise that you can do that.
It looks like the market is getting more crowded with VPN-related products from the likes of VPNet Technologies, Ascend and 3Com. What's Shiva's competitive advantage?
The good news about most of those is they have yet to actually deliver a product. They have talked about it but have not delivered. So first and foremost, Shiva delivers. Secondly, Shiva offers solutions for three different access methods under one suite of technology.
There have been reports that Shiva's LanRover Access Switch drops connections after receiving more than 22 simultaneous calls, whereas Bay's Versalar 5000 Access Switch and Compaq's Microcom 6200 handled up to 60 simultaneous calls. How do you plan to lead the dial-up remote access market or VPN market when one product is apparently facing technical difficulties?
That's not the LanRover VPN Gateway. And, that would have been the first test the LanRover Access Switch didn't win.
If customers use the VPN Gateway, are they going to have some similar difficulties?
Those problems don't exist, I'm sorry. But the Gateway is independent of the Switch. That I will say.
How secure is VPN?
The encryption is based on data encryption standards - DES 56-bit, 128-bit and 168-bit. At the beginning of this quarter, we got approval from the US Department of Commerce to export 56-bit worldwide, which is the US banking standard for data encryption. We have the capability to go to 168-bit and it's my belief the US Government will withdraw those restrictions by the end of the year.
Which markets are you targeting with VPN?
The medium- to large-sized businesses because they tend to be the early adopters. Specifically, we're going after the businesses who have remote workers, particularly in Asia. Another go-to-market strategy is the Internet service providers. The VPN Gateway allows service providers to sell a business access solution to their customers.
Does your focus on the VPN market mark the beginning of the end for your participation in the carrier market?
The relationship we had with Northern Telecom (Nortel) was really one that was focused solely on going after the very large carriers. But 85 per cent of our business comes from the business sector and we've realigned our focus in that area.
So what is on the horizon for Shiva?
At the moment, VPN is the major push. Right behind that is this whole set of applications for intranets and extranets - directories, bandwidth management and voice-over-Internet protocol. v