Aladdin Announces eToken -- Next Generation Security Key Based on Universal Serial Bus Port.

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 19, 1999--

eToken protects network and Web assets with maximum

ease-of-use and security;

and with major cost advantages

RSA Data Security Conference, Aladdin booth No. 238--Aladdin Knowledge Systems Ltd. (NASDAQ: ALDNF), a global leader in the field of Internet and software security, today announced eToken, the first USB-based device for network and data integrity in the Internet environment. eToken is based on the vastly enhanced functionality and ease-of-use provided by the Universal Serial Bus (USB) port and does not require any additional reading equipment. This enables companies to eliminate costly deployment issues, and maximize user-friendliness without compromising security.

In a recent study, Frost and Sullivan forecast sales of hardware security tokens to reach 16 million units by the year 2001, growing at an annual rate exceeding 40 percent, fuelled by a shift to Public Key Infrastructure (PKI) in large corporations. Given their functionality, legacy hand held tokens are not expected to survive this shift and this creates a window of opportunity for smart card and USB-based tokens.

"When we launched the first USB-based security device last March, it was clear that USB was going to quickly create a second-generation market for security tokens," said Aladdin's CEO and President, Yanki Margalit. "It was clear from research, and from our longstanding experience, that successful token-based solutions needed to be easy to use, simple to deploy and secure. eToken delivers on all three with a significant cost advantage."

eToken was designed to take advantage of the convenience of the USB port and bypass shortfalls in current security solutions. Conventional password-based responses to network and desktop security are fallible and ignore threats launched from outside the network. In addition, traditional token-based methods and biometric recognition systems either fail to support modern Public Key Infrastructure (PKI) or need external hardware, both of which have prevented their general acceptance.

"Aladdin's sophisticated use of the dynamic new USB port represents an approach and a technology that will profoundly change the e-commerce world forever," said, global e-commerce and smart card expert William B. Seebeck, managing director of Seebeck International, L.L.C. of Wilton, CT. "Aladdin has produced a simple looking and functional device packed with "smart technology" that helps secure transactions for both Internet users and merchants. Instead of relying on a software-based solution, I think they have brilliantly taken advantage of the USB port and solved many of the problems confronting e-commerce using an exciting new approach that clearly will endure," he said.

eToken is based on Aladdin's pioneering technology in USB-based software protection introduced for PC and Mac in early 1998, fully exploiting the millions of USB ports currently shipping on PCs, laptops, palmtop devices, as well as a host of peripherals. eToken's technology encrypts information and stores private keys, passwords or electronic certificates in a USB-based token the size of a domestic house key.

When it is inserted into a USB port, a highly secure "dual factor authentication" process takes place in which (a) eToken is "read" by the host PC or network, and (b) the user types in his or her personal password for authorization. This unique combination of something the user has -- eToken -- with something he or she knows -- a password, ensures unrivaled security. eToken's mobility, ease-of-use and simplicity in deployment make it an ideal authentication solution for VPN, extranet and e-commerce.

Since PCs and laptops started shipping with USB ports back in 1997, the momentum towards USB ports, as the de facto standard for connectivity has been unstoppable.

eToken will also be available in smart card format, a standard supported by Microsoft, HP and many other leading industry vendors. The smart card token will rely on the groundbreaking smart card expertise developed by Aladdin.

Pricing and Availability

Aladdin has forged the first of many partnerships with Aliroo Inc. and Ashley Laurent, Inc., each of which is currently integrating eToken with their respective security solutions. eToken will be available to the rest of the market in early Q1 1999 for developers and integrators of security solutions. The price for eToken is between $20 to $50 depending on quantities purchased. For more information on Aladdin and eToken call 1-800-562-2563 or e-mail [e-mail].

About Aladdin

Aladdin Knowledge Systems Ltd. (NASDAQ/NMS: ALDNF) is a global leader in the field of Internet and information security. Aladdin's products include HASP and Hardlock, token-based software security systems that ensure license compliance and provide innovative marketing and distribution solutions for developers and publishers; Privilege, a comprehensive Internet-ready software licensing tool for developers; and the award-winning eSafe line of anti-vandal, anti-virus and content filtering software for Internet-connected networks and PCs. Aladdin, an ISO 9002 accredited company, has offices throughout the United States and the world including Seattle, New York, Chicago, the United Kingdom, the Netherlands, Germany, Japan, and Israel as well as over 40 distributors serving more than 100 countries. For more information, visit the Aladdin home page at www.aks.com.

Safe Harbor for Forward-Looking Statements: Except for the statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the loss of market share, changes in consumer buying habits and other factors over which Aladdin Knowledge Systems Ltd. have little or no control.