Entrust Shakes Up ID Security Market

The market for security hardware tokens just got a jolt.

Entrust(ENTU Quote) launched a $5, one-time-password hardware token on Jan. 30, in a move that could lead to pricing pressure and erode market share for rivals RSA Security and Vasco Data Security International(VDSI Quote).

Hardware tokens that display a constantly changing set of numbers are popular among companies that use it for user authentication, in addition to the typical username/password combination, for increased security.

Though having stronger authentication has been a target for many businesses, including financial services and banks, the tokens market has been stymied by expensive products.

Many companies are unwilling to budget in the often-prohibitive costs of providing tokens for their employees.

That's why the move from Addison, Texas-based Entrust is big news for the $500 million hardware-tokens business.

"We have been looking for lower pricing for years," says Ray Wagner, managing vice president at research firm Gartner. "The tokens business has been looking for that inflection point, and this could be it."

A $5 Entrust token could change the economics of the market, Wagner believes. Rival RSA's token costs about $20, and Vasco's token comes at an average price of $8.

"There's an infrastructure cost, but at $5 a pop, I do think there will be some effect on uptake in enterprises," says Wagner.