nCypher buys remnants of NeoScale

Cryptography company nCipher Tuesday said it has bought two of the product lines of foundering storage security company NeoScale Systems.

Richard Moulds, vice-president of marketing and product management at nCipher, says the company has acquired the NeoScale CryptoStor KeyVault and CryptoStor Tape appliance lines, for US$1.95 million. Those offerings are said to have about 300 customers.

The company did not acquire NeoScale’s third product, the CryptoStor FC Disk, which Moulds says it considered an older product with a substantially different technology.

“NeoScale had taken on loans and the lender was foreclosing,” Moulds says about the deal.

He says nCipher is now in the process of moving into the Milpitas, Calif., offices of NeoScale, with the expectation that about a dozen of NeoScale’s 75 employees will begin working for nCipher. A publicly traded firm based in England with U.S. offices, nCipher has about 1,000 customers and grossed about $25 million the first half of 2007.

The company plans to support the CryptoStor KeyVault and CryptoStor Tape products. The main rationale for acquiring the product assets of the firm is to broaden nCipher’s product portfolio and customer base.

Storage security is a “very hot market,” says Moulds, noting that nCipher’s customers are typically large banks applying encryption key management in long-term security strategies, while NeoScale customers have often been smaller, deploying the encryption appliances to meet immediate regulatory goals such as the Payment Card Industry security standard.

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