Network Associates Inc. has plotted out a strategy to sell a new mix of network analysis and security products into the service-provider market.

NAI Chairman and CEO Bill Larson says his company is not retreating from the enterprise market, where the six NAI divisions market antivirus software and services, network sniffers, the Magic helpdesk, PGP encryption software and other products to corporations and small business.

Rather, NAI, which has seen revenues bounce back following a dismal 1999, is confident it can achieve further growth by reaching into the service-provider market. The company is targeting telcos, ISPs, wireless carriers, broadband carriers and Web-hosting facilities, among other types of network operations. That’s largely unexplored terrain for NAI.

“Major new-product initiatives will fuel the next wave of growth, based on the Internet, wireless and broadband,” Larson said.

One of the new products is PGP for Wireless. It’s software for the Palm Pilot and other handheld devices – including cellular, Wireless Application Protocol and infrared – that enables users to encrypt files and scan for the new breed of computer viruses, like the Phage, targeting wireless handhelds. This new set of products is expected to ship by year-end.

NAI last week shipped a LAN sniffer for the Symbol Technologies wireless LAN, and expects to have products for other wireless LAN products as well. In the past, NAI focused on providing sniffers for Ethernet LANs. But the bigger push may be into the area of supplying sniffers, firewalls and antivirus products for the broadband communications arena.

NAI’s Sniffer division has developed a broadband sniffer for network analysis of optical networks, cable and DSL services. “This is something a company like AT&T can use to ensure service-level agreements with customers,” Larson said. This high-end line of sniffers, which can output analysis of OC-48 networks on a laptop, will cost about US$300,000, he said.

NAI also has developed a voice-over-IP sniffer for use by telcos to monitor and analyze IP packets, particularly voice, over SONET. The voice-over-IP sniffer, expected to cost US$75,000, has a buffer box, Larson said, “because voice-over-IP traffic is going by so fast, you have to hold it in a buffer.”

NAI also has teamed with Nokia to build and sell an antivirus “appliance” (combined hardware/software) that can be used to do high-speed scans of mail traffic for possible computer viruses.

NAI’s Magic Solutions division, which markets the Magic helpdesk, said it is evolving the product to become more of a rapid-application development tool for building Web-based applications. “You’ll be able to use this to build Web forms for different business needs. Conseco is using it to manage insurance quotes,” Larson added.

NAI, which has seen its revenue rise 23 per cent over the last quarter with 100 per cent earnings growth, believes the reorganization of its business units undertaken late last year has proven successful. Larson added that the antivirus software and services fuelled the largest share of the growth during the last year.

When NAI split itself into six business units at the end of 1999, employees were told that if the revenue results were positive from reorganization, the units might each be spun off in IPOs that would benefit the employees.

Though the revenue picture is much better now than last year for NAI, the company is unlikely to spin off the separate units in the near future, due to stock-market volatility and advice from big Wall Street investment firms that market conditions aren’t favorable, Larson said. “But it’s still on the table.”

And the humbling, if not collapse, of the start-up dot-coms in the stock market has actually proven a boon to NAI by making it less difficult to retain valued employees, who in earlier years had bolted to the start-ups and the promise of instant stock wealth.

“It was a challenge for companies to hold their employees at that time,” Larson said. While that’s always a challenge, NAI thinks it has better leverage than it did last year, and in fact, has grown from 2,700 employees last year to 3,200 today.

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