US-based Shiva, struggling in the moribund market for remote access networking hardware, is hoping virtual private networking (VPN) will jump-start sales. The firm is best known for remote access servers such as its LANRover line, which enables employees to dial into company networks from outside the office and access data and applications. Credited with pioneering the remote access market, Shiva lost market share in the past two years to bigger rivals such as Cisco Systems, 3Com, and Ascend. It sold US$57 million worth of remote access servers last year, giving it 11.8 per cent of the world market, according to technology consultancy, Dataquest. However, Shiva was far behind in the faster-growing market for remote access concentrators - larger devices which handle thousands of users at a time, are easily upgraded for more users by plugging in extra modules, and are sold to large firms or Internet service providers. Dataquest said the company sold $63.6 million worth of concentrators last year - only 10 per cent of market leader, Cisco's sales. Shiva's 1997 revenues were $144.3 million, down from $200.1 million in 1996, as the company reported losses of about $13.6 million. Compounding Shiva's lack of growth, the remote access market is failing to keep pace with other booming networking markets. International Data Corp said the total Asian market last year for remote access hardware was $175 million, while sales of local area networking hardware in Asia in the first three months of this year alone were worth $562 million, or nearly three times as much. Shiva chairman and chief executive Jim Zucco said the company had updated its remote access products to enable employees to connect to company networks through the Internet. Mr Zucco emphasised the cost savings that Shiva's new LANRover VPN Gateway would bring. If an employee was overseas and wanted to connect to the corporate network, dialling direct would incur huge international toll charges, he said. Connecting through the Internet by dialling a local access number would be much cheaper. Corporations in this case also would need to subscribe to an ISP that provided 'global roaming' access. VPN is a technology that allows users to send and receive data privately through public channels such as the Internet by encrypting it. One consultancy, Infonetics Research, predicted the market for VPN-related products would reach $1.2 billion by 2001. VPN has yet to catch on with most companies, which were concerned about the security of data. Vincent Yiu, networking analyst for IDC in Hong Kong, said security through VPNs was 'still a legitimate issue' due to problems such as computer hackers. Mr Zucco, the former president of network communications software at Lucent Technologies, said Shiva's VPN products could protect data all the way from the sender to the corporate network by encrypting it using Triple DES 168-bit encryption. This was more secure than making a standard phone call, he said. Product quality aside, Shiva faces obstacles in boosting sales in the Asian region. Mr Yiu said Shiva's remote access servers were proving 'very popular' with smaller companies. He said the firm's remote access servers could handle up to eight dial-up users simultaneously, and cost less than HK$10,000. Mr Yiu said, however, Shiva's sales were not strong among ISPs or large corporations. The firm relied on a single distributor in Hong Kong and lacked the large marketing and support staff of competitors such as Cisco and 3Com. 'When you are buying something that costs half a million dollars or more, you need to be persuaded that the vendors are supporting you,' he said. Northern Telecom also is reported to be selling Shiva products. The market for remote access products in Hong Kong was worth US$14.4 million last year - a growth of 53 per cent over 1996.