Elements of the technology may be moved into the Lotus Notes groupware product, into IBM's net.Commerce merchant server, or both.
"We will not bring Cryptolopes Live to market as planned," IBM spokeswoman Trink Guarino said, referring to a Java-based version of the technology that has been in beta testing for several months. "The beta told us that our customers would prefer to see that technology incorporated in other applications."
The unit's demise marks a retreat from a high-profile campaign on the technology launched by IBM last year. The Cryptolopes Live beta announcement in September was featured among several initiatives at a major e-commerce trade show, and the company had showcased the effort at earlier events, too.
Decisions on the product's future are expected in the first half of 1998, Guarino added, and employees in the unit are likely to be offered transfers. IBM was unable to say how many employees worked on the product, but it was believed to be no more than 50.
The Cryptolope Live product built a secure wrapper around digital content or software applications so they could be sent safely over the Internet. It also included rules on how the information inside could be used--pricing per usage, free under certain conditions, and so on.
The setup also included software tools and a "license clearinghouse" server to handle "rights management," as the product category is called. IBM and competitors in the area say the end of Cryptolopes does not mean that the category of protecting intellectual property rights through software is dead.
"Customers don't want to worry themselves about what makes the best sense [in how to use Cryptolopes]," Guarino noted. "They want the whole process in an application. It's still a promising field."
"I believe, as does IBM, that this has nothing to do with the viability of the market or the need for this," said Paul Bandrowski, president of Softbank Net Solutions, which is building a service to handle rights management not only for application software but also for music, medical records, documents, and other vertical industries.
"We have not seen Cryptolopes as a competitor to us in the electronic software distribution space for quite a while," said Kate Joseph, vice president of product marketing for Portland Software, which offers a system to distribute software over the Internet.
IBM has taken several tacks with the Cryptolopes. The technology originated as part of a development effort called Databolts.
Then Big Blue offered a service called InfoSage to handle content distribution for publishers, but about a year ago it shuttered that operation, saying it competed with IBM's publishing customers. InfoSage had been part of IBM's Infomarket operation, a service that is likewise closing down.
In January, IBM began rewriting Cryptolopes in Java, a task that was finished by September, at which point it went into beta.
Bandrowski thinks the Cryptolopes effort was not well suited to a company as large as IBM. "People want a solution," he said. "They don't want to buy technology to build the infrastructure to do it. They want the system to have flexibility for their needs."
But Bandrowski said he's sorry in some ways that IBM is dropping out. He noted, "They are a good milestone of where things are in the market."