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Microsoft Seals VPN Deal, Immediately Cuts Prices

As its security portfolio expands, Microsoft knocks 25% off the list price of VPN appliances and software to spur demand.

Microsoft is cutting the price of VPN products gained through its just-completed acquisition of Whale Communications.

Microsoft on Tuesday disclosed it has completed the acquisition of Whale Communications, announced in May, for undisclosed terms. Based in Fort Lee, N.J., Whale will operate as a subsidiary of Microsoft, says Steve Brown, director of product management in Microsoft's security business unit.

Whale makes a server appliance that runs Microsoft's Internet Security and Acceleration Server firewall alongside Whale's own VPN software. The appliance supports remote access to business applications over a VPN using Secure Sockets Layer encryption. Prices for the Whale appliance start at $18,000. To seed uptake, Microsoft is reducing prices on the appliances and related software by 25% through the end of the year. Computer resellers will receive an additional 10% profit margin on the products from Microsoft.

Microsoft has made several acquisitions of computer security companies in recent years. Last year, it bought anti-spam and antivirus vendor Sybari Software; sales of Microsoft Antigen products acquired in that deal rose 80% during the quarter ended June 30, according to Brown. Microsoft in the past two years also bought antivirus software maker GeCAD and spyware removal software vendor Giant Software.

Later this year, Microsoft plans to begin releasing new versions of its business security products under the Forefront brand name. Microsoft will fold Whale Communications' Internet Application Gateway appliance into the Forefront line next year.

Using Whale's technology, workers can gain SSL VPN access to apps including Microsoft's Exchange and SharePoint servers, business apps from SAP and Oracle, and IBM's Lotus E-mail software. Whale's server appliance runs Microsoft's ISA Server firewall and the VPN gateway on separate motherboards; over time, Microsoft may merge the software into one product, the company has said.

Senior product manager Joel Sloss says Microsoft within the next two years plans to integrate its Network Access Protection software, which can quarantine PCs that don't meet security policies and is due in the upcoming Longhorn version of Windows Server, with Whale's gateway software

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