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Firms take on VPN technology

Compatible Systems is among several start-ups vying for a piece of the growing market for VPN equipment, with rollouts planned for later this year.

Networking players are increasingly rising from their seats to applaud a technology that allows users to set up secure connections across the public Net.

Boulder, Colorado-based Compatible Systems is the latest firm to morph into a VPN (virtual private network)-centric operation. The privately held company will soon roll out high-density VRN access servers, allowing businesses and service providers to offer the technology to as many as 2,000 users simultaneously.

News of the upcoming VPN products directly follows the rollout this week of new high-end routing devices for service providers.

Echoing the sentiment of several executives in the industry, Tom Ferrell, marketing manager at Compatible, expressed confidence that VPN technology is more than just hype. "We think VPN is really going to happen once people see the savings they can realize," he said.

VPN technology allows users to initiate a secure connection across a network based on IP (Internet Protocol) and provides business opportunities for service providers focused on the corporate outsourcing market.

The capability is useful as a cost-cutting measure for companies who do not want to deploy a plethora of dedicated leased lines from remote locations to headquarters. The technology can be used across the public Internet, private intranets, or as a mechanism to tie third parties to corporate networks in an "extranet" arrangement.

Compatible has about 120 customers using VPN capabilities with the company's IntraPort access equipment and accompanying software, according to internal estimates.

In May, Compatible will launch a new member of its IntraPort access server family that supports up to 64 simultaneous VPN connections. That will be followed in the third quarter by a box that supports as many as 2,000 simultaneous users, according to Ferrell, targeting service providers and large corporate networks.

Ferrell said it is the small and medium-sized businesses that are driving VPN adoption, since those are the types of firms that can quickly see the benefits of using the technology over leased lines, like a T1.

Current IntraPort servers support eight simultaneous connections. The box includes server software that supports the IPSec set of connection security protocols and a client component that runs on a Microsoft Windows 95 machine.

Other early entrants in the market include New Oak Communications, which was recently snapped up by Bay Networks for $156 million.

Analysts said that number will only grow. "It's early in the market, so there's certainly room for up-and-comers," said Larry Howard, analyst with Infonetics Research. "We're finding that a lot of people want to put VPN functions in devices they are familiar with."

The analyst firm expects VPN-related business to grow at a clip of 100 percent per year through 2001, at which time, Infonetics predicts, there will be an $11.9 billion opportunity for products, integrators, and service providers.