GTE Government Goes for Encryption
GTE Government Goes for Encryption Market
By Nick Wakeman, Staff Writer
Even though there is a "for sale" sign in the window, GTE Government Systems is pushing ahead with plans to expand its reach in the market for encryption and information assurance.
The division of GTE Corp. of Irving, Texas, will release a new encryption product in the fall. It also is signing up new partners to broaden its information assurance capabilities for networks that operate using both asynchronous transmission mode and Internet protocols.
These plans are going ahead despite the fact that GTE is selling the $1.4 billion, Needham, Mass.-based government division so the company can focus on its core commercial capabilities.
Rumored bidders for the division include General Dynamics Corp. of Falls Church, Va.; L3 Communications Inc. of New York; Northrop Grumman Corp. of Los Angeles; and Raytheon Co. of Lexington, Mass.
GTE officials said they hope to have a final deal in place by September, although other sources indicate a deal is imminent.
"We think we are one of the reasons there is so much interest in us," said Bob Dutton, vice president and general manager of Trusted Network Solutions, the unit of GTE Government Systems that sells and services secure networks to the government. "We can't afford to sit and wait [for the sale to be completed]. We still have a job to do."
Dutton's unit pulled in about $100 million in revenue in 1998 and is growing about 20 percent a year, he said.
Most of that business is with the Defense Department and intelligence agencies, but Dutton said he is looking to expand into other parts of the government.
Helping to fuel growth of GTE Trusted Network Solutions are Type 1 encryption products and services that are used to move highly classified data across networks.
Working with the National Security Agency, GTE developed a high-speed encryption product last year called FastLane, which is for networks using ATM, Dutton said.
This September, GTE will release a second encryption product, called TacLane, for networks that are using Internet protocols or ATM. "That is the next generation product," Dutton said.
GTE is the only company authorized by NSA to sell Type 1 encryption products for ATM. Motorola Inc. of Schaumburg, Ill., competes with GTE to sell Type 1 encryption products for networks using Internet protocols.
Dutton said having products certified by NSA helps GTE compete against other systems integrators like Boeing Co., Lockheed Martin Corp., Raytheon Co., and TRW Inc.
"To be certified by NSA, that is pretty tough stuff," said Ron Jefferies, principal analyst with Jefferies Research in Arroyo Grande, Calif. "There really is no single market leader. GTE has a strong federal presence and is one of the leaders of high-speed encryption."
For security reasons, NSA controls which agencies can buy Type 1 encryption technology, Dutton said. "There needs to be a valid security need," he said.
So while GTE can provide the high end of encryption technology itself, the company is turning to outside partners to broaden what it can sell to agencies that do not have the high level of encryption for moving data, he said.
"There is a real need in the government for encryption and security that doesn't get to Type 1," Dutton said.
In April, GTE formed a partnership with Network Associates Inc. of Santa Clara, Calif., to service and resell firewall, intrusion protection and virus detection products. In late May, another partnership was formed with Celotek Corp. of Research Triangle Park, N.C., which provides encryption technology to commercial clients.
"We'll be taking their products to our markets," Dutton said. "A single company can't provide everything."
GTE's goal is to become the preferred choice for network security, from encryption to network architecture and design to network management, Dutton said.
The move to broaden its offerings is important for GTE, especially expanding beyond ATM, Jefferies said.
"ATM is certainly a strong market, but there are alternatives," he said, most notably equipment using Internet protocols to move data and ethernet technology. "There is more than one way to skin the cat."