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By Joey Gardiner, 7 March 2002 17:20

NEWS Network Associates is to wind-down its popular PGP encryption software division after failing to find a buyer for the business. PGP, or "Pretty Good Privacy", is a popular PKI standard used for desktop and email encryption, and was bought by Network Associates (NAI) in 1997. However, George Samenuk, CEO of NAI, announced last autumn he was looking to sell the technology to concentrate on other more profitable areas of business. This strategy has not born fruit and thousands of PGP users across the internet could now be left out in the cold. NAI said it had not been able to find a perfect buyer for the business that could guarantee to support existing PGP customers. NAI will honour all existing support contracts but will not develop the product further. Sarah Whipp, director of EMEA marketing, said: "We just didn't see the level of demand for this product that could validate it as an ongoing business." The technology was created in the early 1990s by encryption guru Phil Zimmerman and was based on proprietary - and until then quite expensive - encryption algorithms developed by RSA security. Zimmerman braved the wrath of both RSA and the US government by publishing the code on the internet and making it available for free, simultaneously becoming a hero to many in the internet community. PGP's popularity lead to a $36m purchase by Network Associates in 1997, but the nature of the business meant NAI was unable to turn the software's undoubted popularity into cash. A year ago NAI stopped supporting free versions of the software and charged users for its own version, and has since been unable to grow the business. Jose Lopez, research analyst for Frost and Sullivan, said there was no doubt a lot of users will be disappointed: "This is a widespread technology - NAI sure are going to upset some people with this." Tim Pickard, marketing director for arch-rival RSA denied the sale meant it was impossible to make money out of PKI. He said: "This is indicative of the fact this is still fledgling market, which has suffered from over-hype. However, we're now starting to see steady growth." He admitted RSA had suffered originally at the hands of PGP: "When Zimmerman essentially took our algorithm - which we had been selling - and published it on the internet, for free, there's no question he made an element of RSA's business model very challenging indeed."