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Subject: [Clips] RSA Security Sees Hope in Online Fraud
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RSA Security Sees Hope in Online Fraud
By Brian Bergstein August 22, 2005
AP Technology Writer
BEDFORD, Mass. (AP) -- It was a Friday afternoon for the computer
encryption folks at RSA Security Inc., and summertime greenery filled the
countryside view from Art Coviello's office.
Even so, the RSA chief could have been excused if he didn't seem relaxed.
RSA had just announced its second straight set of quarterly results that
didn't dazzle Wall Street analysts, and RSA's stock was flirting with a
But Coviello shrugged it off. Analysts, schmanalysts. More importantly, he
said, lots of factors are about to turn in RSA's favor, namely the need for
more secure, traceable financial transactions in a world beset by online
fraud and identity theft.
The whole thing's moving a lot more slowly than it ought to, Coviello
said. We've got to keep pounding and pounding until we reach a tipping
point, and we will take advantage of it.
The lack of an obsession over quarterly results isn't the only unusual
thing about RSA, which still bears the marks of an academic past despite
being a $300 million company with 1,200 employees and customers in
government, banking and health care.
RSA is named for three Massachusetts Institute of Technology professors,
Ron Rivest, Adi Shamir and Len Adelman. Though they are no longer involved
with the company they founded in 1986, their invention of a seminal method
of cryptography set the tone for the company and is crucial in online
Today RSA is perhaps best known for staging a prestigious annual security
conference and for selling 20 million little devices that display a
six-digit code computer users must type to gain access to computer
networks. The code, which changes every minute as determined by an
RSA-created algorithm, is unique to each SecureID token, making it
useless to a snoop.
The requirement that users enter the code in addition to a password is
known as two-factor authentication, an approach that figures to gain ground
over simple passwords as more and more sensitive data move online.
Indeed, RSA's sales of authentication products jumped 16 percent last year,
as RSA's overall profits more than doubled, to $35 million. E-Trade
Financial Corp. and America Online Inc. began offering SecureID devices to
some customers over the past year. The Associated Press also uses the
tokens for network access.
It is the Kleenex or Q-Tip of two-factor identification, said Gregg
Moskowitz, an analyst with the Susquehanna Financial Group. SecureID is
the brand name.
But wide deployment in consumer applications has come slowly.
In theory, every institution that does business on a Web site could
increase its security by offering its users RSA tokens.
But practically, it would be a nightmare to have 20 different devices with
their own codes. And banks apparently don't trust one another enough to
accept a competitor's authentication token.
RSA hopes to smash such hang-ups by acting as an intermediary, launching a
new hosted service this fall in which its servers will check whether a
consumer entered the proper token code -- even if the token was made by an
RSA rival -- then relay the yea or nay back to the bank. RSA already
provides such a service for companies' internal access control, but has yet
to offer it for consumer applications.
Investors will be watching closely. Although Coviello is confident that
wider trends in access control -- such as rampant identity theft and abuse
of Social Security numbers -- should play to RSA's strengths, he
acknowledges that RSA needs to do more to push the market rather than wait
That means RSA has to be much more than the company known for
authentication tokens -- a product that some analysts say is coming down in
price because of competition. RSA also hopes to expand its sales of
software and security consulting services, where heftier rivals such as
VeriSign Inc. and International Business Machines Corp. also lurk.
When you consider all the identity theft that is taking place now, the
challenge for RSA is to monetize that, Moskowitz said. It's easier said
RSA believes one key differentiator can be its research arm, including the
eight people in RSA Labs, a group so focused on the advanced mathematics
behind cryptography that it is described as an academic institution within
RSA researchers are expected to dream up ways to expand the use of
two-factor authentication, though sometimes that puts