Scares about national secrets getting into the wrong hands could be just what Protect Data Security Inc. needs to get noticed.

The company is certainly not rooting for national security breaches.

But reports of lost, stolen, or inappropriately secured computers raise troubling questions about the vulnerability of millions of corporate desktops and laptops.

For example, a former Central Intelligence Agency director is under investigation for taking certain files home. Somebody once walked off with a computer from Visa with credit card numbers in it.

Protect Data wants to come to the rescue. It is one of many companies in the field of data security that are anticipating a private-sector market explosion, in part as a result of technology transfer-or just the borrowing of ideas-from government activity.

Protect Data differs from some competitors in that it specializes in one crucial link in the security chain: the personal computer or laptop and its hard disk. It is working with some banks to prove the concept.

The Walnut Creek, Calif., vendor, a subsidiary of Protect Dataskerhet of Sweden, offers the Protect software, which erects a shroud of data encryption and user authentication around computers and their boot-up processes.

John Muir, president of the U.S. company, said one of his jobs is to get the word out about Protect Data and what differentiates it in a seemingly crowded field.

One of his explanations centers on how hard-disk encryption differs from the more widely sold file encryption. Many companies encourage or require the scrambling of data files, but the process depends on employees' actively invoking the necessary commands.

"People forget," Mr. Muir said in a recent interview. "Companies are misguided when they think they can mandate-or switch the burden to employees for-security policy."

With hard-disk encryption, he said, the security is passive and comprehensive. "The employee doesn't have to think about it."

Protect has a few direct competitors. They include Fischer International Systems Corp.'s Watchdog software, Axent Technologies Inc.'s PCShield, and Security Dynamics Technologies Inc.'s SecurPC. (Security Dynamics is also the parent of RSA Data Security Inc., the leading licenser of data encryption programs to companies like Protect Data and its rivals.)

Mr. Muir contends he has an advantage in that most other hard-disk encryptors are part of broader "security suites" and do not get the marketing and other attention they deserve. "We are very focused on one product, a pure play," he said. "Companies that don't derive a lot of revenue from (desktop security) don't give it notice."

"There are a fair number of established companies in this area, but the biggest competitor is apathy and lack of understanding," Mr. Muir said.

"Few executives have any kind of real PC security," he added. The burgeoning market for notebooks, "which are in many cases the primary computers for those who carry them," only exacerbates the apathy problem.

That may begin to change as "people put their own data, like credit card numbers, on their notebooks," Mr. Muir said. "That gives them a stake in making sure they are secure, and that creates a sort of congruence between the user and the company."

"We are going to see a lawsuit one of these days about the loss of sensitive data in a stolen PC," he warned. "It is no longer an excuse to say there is nothing you can do about it. There is a reasonably priced alternative."

Desktop security did not get to be so "seamless" overnight, Mr. Muir pointed out. He has been in the data security field since 1987.

He has known and worked with Protect Dataskerhet and its chief executive officer, Carl Rosvall, for most of the Stockholm-based company's 11-year life. It is the biggest network security distributor in Scandinavia, a leading-edge Internet market.

Mr. Muir holds a patent in user authentication technology. In 1982 he co-founded Enigma Logic, which developed the SafeWord Authentication Server. Mr. Muir also worked for Secure Computing Corp. of San Jose, Calif., which acquired Enigma and SafeWord and last year became a worldwide distributor of the Protect software.

Protect's European operations had long been a distributor of Secure Computing products, so when Mr. Rosvall called on Mr. Muir a few years ago to help bring what is now the flagship Protect software for Microsoft Windows platforms on to the market, the move was essentially within the family.

"I said, 'This is a tough one,'" Mr. Muir recalled. "We learned from our earlier PC encryption business that there are a lot of other companies out there. But I delved into it and there was a big and growing potential market. The problems and issues that had been impeding it were pretty much solved, which is why I came on board."

Helping the cause are strategic partnerships with Secure Computing and several others, including the Canadian virtual private network vendor TimeStep Corp., the public key infrastructure company Entrust Technologies, and the authentication token and systems supplier Activcard.

The establishment of Protect Data in California was announced in January. At that time, the company emphasized both the vulnerability of distributed and mobile corporate computing and the ability of Protect version 3.0 to manage the complexity.

"Hard-disk encryption and boot-level authentication are good, but they are not of use to banks unless they can deploy across the network," Mr. Muir said.

Rather than relying on "a cadre of people at headquarters" to run the security program, Protect is designed to "distribute the administrative burden. Management begins centrally and is distributed around the company. We don't envision companies' having to add administrative people" to manage the deployment.

Mr. Muir said the system, despite its computing intensity, causes no noticeable drag in performance. It has the key recovery capability that corporations want to ensure that lost files can be deciphered and reconstructed when necessary. And if a user forgets a password there is a quick and easy way to register a new one.

Banks are central to Mr. Muir's marketing plan-as are high-tech companies, large manufacturers, and accounting firms-and he expects Protect's visibility will rise in North America as clients are signed.

The company has worked with one U.S. bank, whose identity it cannot divulge, to hone the network management capability and scalability of Protect. The bank "pointed out shortcomings and helped us get to where we are ready to go," Mr. Muir said.

"Banks are intensively data driven and have fiduciary responsibility," Mr. Muir said. "We have gotten good response from the banking sector."

One publicly announced customer is S-E Banken of Sweden. That country's phone company, Telia, and the telecommunications equipment leader Ericsson are also big users.

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