FRAMINGHAM (02/07/2000) - Nokia Corp. will soon be the proud owner of virtual private network vendor Network Alchemy Inc. and has big plans for the startup's technology that go far beyond VPNs.
Nokia said last week it would buy the 2-year-old Network Alchemy for $335 million and use the firm's patents and core technology to develop e-business hardware.
Network Alchemy makes CryptoCluster servers that can handle 20,000 simultaneous VPN connections. The servers can also load-balance Internet traffic and if one CryptoCluster fails, another can pick up all its sessions.
The acquisition gives Nokia high-end VPN gear to augment the VPN hardware appliances the firm sells to branch office and individual users. These devices run VPN software from Check Point Software that sets up VPN sessions and encrypts VPN traffic.
In addition, Nokia will use the underlying fault-tolerance and failover capabilities built into the Network Alchemy operating system to develop other devices for service provider networks. Nokia did not specify what gear it will apply the technology to, but company officials say these new products will support secure and reliable online business services.
Customers using Network Alchemy gear will continue to receive support for CryptoCluster servers, Nokia says.
That is not a worry for Network Alchemy customer Dave Ploch, director of technical architecture for food technology giant Monsanto in St. Louis. He says CryptoClusters were a short-term solution to create VPNs for site-to-site connections within Monsanto and between Monsanto and its partners.
Ploch says he expected VPN startups to get swallowed up by bigger network companies. It has happened to other start-ups (see graphic), and this trend means the popularity of VPNs will skyrocket, predicts Jeff Wilson, a VPN analyst at Infonetics Research.
Cisco's purchase last month of two VPN vendors - Altiga Networks and Compatible Systems - was particularly significant. "End users were waiting for Cisco to decide what to do," Wilson says.
Cisco had promised to put VPN capability in its IOS router software, but its new strategy is to use separate VPN hardware. That will prompt Cisco users to go ahead with hardware-based VPN plans, Wilson says.