__ UPDATA __
__ Cryptical Envelopment __
In September 20, 2000, US Patent 4,405,829 will expire, promptly giving RSA Data Security's anxious competitors a chance to peek at five of their 15 most coveted encryption algorithms. But Jim Bidzos, president of RSA, isn't losing any sleep.
Since January, the 41-year-old executive has been globe-trotting cutting deals and forming partnerships preparing for the inevitable day, he says, when the US government will ease encryption restrictions (which limit export of algorithms to 40-bit keys), thereby allowing RSA to sell its products worldwide.
Bidzos joined the struggling Redwood City, California-based RSA in 1986, recruited by its founders Ron Rivest, Adi Shamir, and Len Adleman. Since then, Bidzos has led the company into the black. In April, Security Dynamics Technologies Inc. signed a US$200 million stock deal to purchase RSA as a wholly owned subsidiary. After topping $11.7 million in sales for 1995, RSA's first quarter earnings at the time of the merger were up almost 800 percent over last year. "Losing the patent isn't going to change anything for us," says Bidzos. "A company is not going to risk the security of its products and customers just because some graduate student can do the work for a nickel cheaper."
Earlier this year, Bidzos established Japanese subsidiary Nihon RSA. Based in Tokyo, Nihon will market its digital signature technology and eventually its encryption algorithms to credit card companies and computer hardware developers. RSA will also hand off clients with subsidiaries in Japan, such as Netscape and IBM, to Nihon RSA, creating an instant royalty revenue flow for the new subsidiary.
In China, Bidzos clinched a partnership with the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), which monitors all imports and exports. MOFTEC will use RSA's products to secure transactions over its networks. MOFTEC, however, is limited to 40-bit keys, which Bidzos says "are a bad idea" for security purposes. But he speculates that the Chinese could replace the shorter keys with the longer, safer 129-bit standard. Additionally, Bidzos hopes his encryption tools will trickle over to the Chinese masses. "It seems inevitable that they will spill over into the private sector," he says, "creating environments where people can communicate without being concerned that the government is listening."
Competitors are clambering for a foothold in the exploding encryption market, which RSA dominates with more than 200 licensees, including AT&T, Oracle, Novell, and Microsoft. However, companies like Cylink Corp. are checking some of the RSA hype. Cylink is giving away its encryption software to developers royalty-free, counting on sales of its network security products for revenues. "There's going to be some real competition between RSA and Cylink," says Martin Hellman, Cylink consultant and co inventor of the Diffie-Hellman key exchange, which Cylink uses for its security applications. Cylink, he says, has "the potential to blow RSA out of the water."
In further global maneuvers, in May Bidzos returned from Europe, where he investigated potential subsidiary sites in Switzerland and Belgium. "Ten years ago, you couldn't give this stuff away," Bidzos says. "The explosion surprises even me. Now, all of a sudden, we're in the middle of everything, and it's kind of fun."
Michael Behar
[Related Wired stories: 3.08, page 114; 4.03, page 128.]
__ Fading Attraction? __
On March 18, after releasing only four titles, Magnet Interactive radically retrenched. That day, all employees of the Washington, DC-based firm were summoned to a local hotel for a mandatory meeting. Workers were sent to one of two rooms: in one, CEO Basel Dalloul upbraided them for flawed productivity; in the other, COO Bill Schick fired everyone present. Said one ex-Magnet staffer, "We were given one week's severance and a slip of paper with the date of our exit interview."
Magnet PR flack Michelle Seebach countered, "It's really a good thing.... We're moving more toward online." To date, Magnet has created Web sites for clients such as National Geographic, Kellogg, and Mercedes-Benz. Even so, Magnet is 130 bodies lighter, and its software output has stalled. Blue Star, a US$2 million albatross, so underwhelmed staffers they nicknamed it Blow Star.
[Original story in Wired 3.11, page 64.]
__ The Mouse Stops Here __
Mice should know their limits. Or so thinks Bruce "Tog" Tognazzini, founder of Apple's Human Interface Group. He figures the mouse pointer should be confined to the edges of the window it's in, enabling users to skate to the tool bars quickly, without overshooting. To exit a window, users would apply force to a pressure-sensitive mouse, which would efficiently scoot the cursor under the window frame. Synaptics, a San Jose-based maker of computer-input devices, agrees.
Beating the competition to the punch, Synaptics will include this function as an option in the next version of the driver for TouchPad a touch sensitive device becoming common on many laptops. With more than a million TouchPads shipped, Synaptics may soon have many of us pushing hard to escape from windows.
[Original story in Wired 3.09, page 134.]
__ Profit or Perish? __
By the end of 1996, the split will be complete: AT&T Bell Laboratories in Murray Hill, New Jersey, will become AT&T Laboratories and Lucent Technologies Bell Laboratories. This "strategic restructuring" of what was once the world's richest and largest private communications R&D lab has caused hand-wringing within the scientific community.
The new AT&T Labs, headed by former Apple VP David Nagel, will be staffing up its research division to continue projects such as speech coding, cryptography, and PCS, whereas the new Bell Labs will draw on much of the US$3 billion that Lucent raised in its April IPO to fund such ongoing projects as integrated circuits, optical components, and the Inferno operating system.
Some worry that big science is being taken over by those who value profit over study. Bell's chief scientist Arno Penzias rejects the notion that pure scientific research is being sacrificed to market profitability, although the definition of pure science seems to be changing. "In the past," he argues, "we used to invent things.... But today it's the context that matters; it's how things fit together."
[Original story in Wired 3.04, page 124.]
