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Network Associates drops PGP encryption

By Stefanie Olsen
Staff Writer, CNET News.com
March 8, 2002, 2:25 PM PT

Software company Network Associates has stopped marketing its PGP e-mail encryption 
software, a further sign that privacy products are a tough sell.
The Santa Clara, Calif.-based company began selling PGP, or Pretty Good Privacy, to 
corporations in 1997 after it bought the software business from the technology's 
author, Phil Zimmerman. The software, downloaded by millions of consumers worldwide 
and used for encrypting e-mail messages, has historically been freeware. The company 
ceased giving it away to consumers nearly a year ago, but the software continues to 
circulate the Net through free download sites.

"Effective March 1, we're no longer selling desktop and wireless encryption," Network 
Associates spokeswoman Jennifer Keavney said.

"The reality is it didn't become a large enterprise sell, and it maintained its 
perception as a freeware product. People around the world are still using it for 
free," she said.

Despite consumer and corporate concern for privacy and security, many such 
technologies suffer in the commercial market because of poor demand. Security software 
maker Zero-Knowledge Systems, for example, late last year stopped selling its core 
technology product, which let consumers surf the Web anonymously. The company failed 
to convert enough free users into paying customers.

Network Associates' decision to stop selling the software comes partly because it 
couldn't find a buyer for the PGP unit. In October, the company announced that parts 
of the PGP business would be for sale and that other parts would be folded back into 
its McAfee business unit.

"They've come to the conclusion that they're not going to be making any money on it," 
said Richard Hunter, vice president of security research at GartnerG2, a division of 
research firm Gartner.

"It's not a good sign for secure e-mail demand, despite consumers' concern for online 
privacy. There's certainly some demand for encryption technology in certain industries 
such as financial services, but it appears that there's not enough that giving the 
product away is an attractive means of selling something else."

Eighteen employees were laid off as a result of Network Associate's disbanding the PGP 

The PGP technology remains a part of McAfee's e-business server, personal firewall and 
VPN (Virtual Private Network) client. Network Associates said it will continue to 
support its enterprise customers for the PGP technology until their contracts expire.

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