Vasco Makes Major Pitch To Recruit New Partners

Vasco's Digipass for Java Phone, launched May 12, is the latest addition to the vendor's line of Digipass authentication products. The secure access software, which generates one-time passwords, can be downloaded to any mobile phone that supports Java. Activation codes for the new product will be provided through Vasco's channel partners, with 1,000-unit licenses starting at $15 per phone, according to the company.

Vasco is making a major effort to recruit new U.S. channel partners at a time when its primary competitor, RSA Security, Bedford, Mass., is dusting itself off following what RSA executives called "disappointing" financial results in its first-quarter 2005. Vasco plans to lure new reseller partners using a combination of competitive pricing, superior product quality, an ISV support base and a balance sheet that reflects nine consecutive quarters of operating profit, said T. Kendall Hunt, founder, chairman and CEO of the Belgium-based security vendor.

For Vasco, leveraging the channel to eat away at RSA's installed base presents "the most chance for high margin with the lowest risk," said Jan Valcke, president and COO, speaking at a recent meeting of financial analysts in New York. It's a proven strategy, as Vasco's more than 1,500 reseller partners worldwide helped pump Digipass sales volume to 1.5 million units in the first quarter of 2005 from 1 million units in the last quarter of 2004, said Valcke.

What Vasco plans to do in the U.S. market is "start with banks and financial institutions, get customers used to the Vasco product, and then expand outward to other commerce and other customers," Valcke said. This means VARs with expertise in financial vertical markets will get the red carpet treatment, he said.

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But Vasco's invitation to U.S. resellers doesn't stop at VARs catering to financial verticals, Hunt added. "We think the opportunity is also there for the low-cost, volume retail market," he said, adding that Check Point Software Technologies resellers, Cisco Systems partners and just plain "box movers" are all in position to successfully resell Digipass and its Vacman middleware.

Digipass tokens are available in almost 20 form factors, some with password keys and others in keyless designs that authenticate to server-based passwords.

The average cost of a Digipass token is about $12.50, with volume pricing dropping to as low as $8.60, said Hunt. Most are designed with a five- to seven-year product lifespan, outliving RSA's popular three-year tokens, even though Hunt admits most banking organizations using Digipass tokens refresh the products about every 12 months for improved security.

Doug Gardner, CEO of Nine Yards Security, Chantilly, Va., has found it as lucrative as it is easy to become a Vasco channel partner. Gardner has worked with RSA products in the past and said RSA's significant product install base may have the vendor overextended in support and services. "RSA has their hands full," Gardner said. "And in some situations RSA products, like their SSO [single sign-on] products, don't work."

Gardner has assisted two large corporations in replacing RSA tokens with Vasco products in the last year alone. He said for Nine Yards, a typical Vasco solution sale includes anywhere from between 200 to "a couple of thousand" tokens. Gardner invoices such customers about $20,000 per job on average, and just closed a $60,000 Vasco deal.

There is one small snag, however. "The Vasco name is not as well-known in the U.S. as RSA, so we do miss opportunities to compete," said Clifford Bown, executive vice president and CFO of Vasco.

But Nine Yards' Gardner said the name recognition problem can be overcome.

"I've had customers look at me and say, 'Vasco who?' But Vasco got over that hump very quickly, outpriced RSA and made it really a no-brainer," Gardner said.