The company yesterday said its tokens have been knocked down to $15 from $35, and that any customers who take Advanced Maintenance (typically 20% of the license) will get free replacement tokens for the life of the contract.

The move is targeted squarely at RSA, which ActivCard’s product marketing manager Andy Smith estimated has 80% of the token market, excluding financial services customers, where ActivCard is relatively strong.

RSA charges about $85 for its SecurID tokens, which customers must pay to replace every three years, Smith said. ActivCard will play the reduced ongoing costs card in trying to attract customers.

For them it’s a great business model, because customers have got to buy tokens every few years, he said. They’ve lived off of the fact that they’re the only game in town.

The latest pricing moves come almost a year after ActivCard launched a Smart Upgrade program, which offered incentives such as free licenses to RSA customers to migrate to ActivCard products.

This program was, Smith admitted, not as successful as the company would have liked. Smart Upgrade worked okay in Europe… I wouldn’t call it a success in terms of hurting RSA’s business significantly, he said.

While the new Open Authentication Reference Architecture (OATH) project, announced yesterday by VeriSign Inc, seems to have the erosion of RSA’s dominance in mind, ActivCard is apparently not 100% sold on the idea, despite being a member.

OATH was created to produce said reference architecture, and to push standards in credential provisioning and one-time password generation. It seems to be aimed at weakening RSA’s lock-in on token customers.

However, other token vendors, including ActivCard, use proprietary methods here, and would also have to adjust their businesses accordingly if standardization (and, extrapolating, pricing pressure and commoditization) occurred.

I think it probably would hurt our business model some, Smith said. He compared possible standards to the X.509 standard, which pushed PKI vendors to differentiate themselves more through the value-adds in their offerings.

ActivCard is currently deepening its focus on the enterprise market, via a burgeoning channel program. Its financials floundered in 2003, as its direct sales efforts failed to sufficiently broaden its customer base beyond a few key US government contracts.

Last October, CEO George Garrick, who arrived fresh from having sold PlaceWare Inc to Microsoft, promised a rationalization of ActivCard’s product set and a focus on strengthening its direct and indirect sales channels.

While this strategy has not been fully delivered on yet, an early indicator is likely to come today, as the company announces the latest versions of its software. For example, the latest suite has only one client software option, a combination of the previous two.

This article is based on material originally published by ComputerWire