Keyboard logger keeps tabs on all

By DANIEL RIORDAN

KeyGhost: pure concentrated evil in a little beige box or a computer breakthrough that could make a fledgling Christchurch company a world leader?

That might depend on how much time you spend on your computer at work actually working, as opposed to emailing friends, visiting sports sites, hunting out Swedish pornography or tapping away at that first novel when the boss isn't looking.

But any way you cut it, finding out where computer users have been is taking Christchurch-based KeyGhost to places where the money is.

The company's product, also called KeyGhost, is a hardware key logger which records everything typed on a keyboard, and can spit it all out again on command for whoever has the password to the log, be it the user or the user's employer.

It has several variations which can plug into a standard keyboard cable or be hardwired inside the keyboard itself.

Powered by its own Hi-Tech internal chip the device is compatible with all computer operating systems.

The standard KeyGhost has a 97,000 character memory, enough for about a week and a half of steady keyboard pecking before it wraps around, overwriting the earliest keystrokes. It retails for $US139 ($356).

The top-of-the-line model stores two million keystroke characters with 128-bit encryption, making access to its log by unauthorised users virtually impossible, and is designed for Government agencies, such as the police and drug enforcement, engaged in long-term computer investigations.

An application that plugs into the computer and is sold separately by the company for $US49 ($125) allows anyone who knows the password (say a keyboard users' employer) to download a series of logs in seconds.

KeyGhost was developed 18 months ago by Shane Tolmie, a University of Canterbury engineering graduate who enlisted help from fellow graduates, brothers Theo and Andreiko Kerdemelidis.

The six shareholders include The Kerdemelidis' mother, Despina Kerdemelidis, a chartered accountant and former computer auditor, father Costa Kerdemelidis, a former chemical engineering lecturer who bankrolled the business, and another engineering graduate, Greg Bacchus.

All six are University of Canterbury graduates.

Apart from their involvement in KeyGhost, the Kerdemelidis brothers and Mr Bacchus own internet services company Z Web, Andreiko Kerdemelidis runs concert lighting company Fusion Productions, and Costa Kerdemelidis owns and manages Greek restaurant Santorini.

KeyGhost made its first sale in April, and Mrs Kerdemelidis says it has sold about $200,000 of units since then, over the internet to individuals and distributors or resellers. Buyers include several Auckland security agencies and the local arm of accounting firm Ernst & Young, although the company's ultimate market is predominantly overseas.

Manufacturing is outsourced to local businesses with R&D, programming and packaging done in-house.

The company is now looking for two business partners to take the product to the mass market.

Ideally, one would be a computer manufacturer wanting to incorporate the KeyGhost product into its keyboards, giving it the competitive advantage of an extra hardware tool.

The other would be a large reseller of computer peripherals with a world-wide distribution channel.

Last month two of the partners visited Seattle and Denver, partly paid by Trade NZ, and feedback on the product was "positive."

The Seattle police were among organisations which pricked up their super snooper ears at KeyGhost's surveillance and intelligence-gathering potential.

The company doesn't yet require outside investors, says Mrs Kerdemelidis, although it wants to raise $1 million to cover mainly marketing costs in its first full year. That marketing is crucial to the company's success.

KeyGhost enjoys "first mover" advantage but its shareholders are well aware of the risk that others may develop a similar product and enter the market with extensive advertising. KeyGhost started out being marketed primarily as a backup system for reporters and writers in the event of their systems crashing.

But a recent US Justice Department decision opened up a vast new market to the company.

The department ruled that it was permissible for employers to use keyboard loggers to monitor what their staff were doing on their computers provided they advertised the fact, typically with a warning sticker on the monitor or keyboard.

Investigators can use it as a monitoring device to establish an audit trail on a suspect's computer.

Auditors, receivers and liquidators can use it to create an unalterable log of all electronic communication on their client's computers.

Another market is computer users who want to monitor their own computer activity. Executives who hold confidential files on their office PC can use KeyGhost to detect unauthorised entry, mindful that most breaches of a company's computer security occur from within the organisation. Parents who want to monitor their children's website visits and email launches are also potential customers.

The company is well aware of KeyGhost's Big Brother connotations.

"There are people jumping up and down saying [keystroke loggers] should be outlawed," acknowledges Theo Kerdemelidis, who says some of the interest in KeyGhost is coming from real life spooks in intelligence agencies and the military.

Mrs Kerdemelidis cites studies showing 20 per cent of Fortune 1000 companies are using software keystroke loggers, with that figure expected to jump to 80 per cent next year.

KeyGhost's advantage, insist its developers, is that it can't be tampered with.

As keystroke logging software becomes more popular and users more knowledgeable they will find ways to get around it, reckons Theo Kerdemelidis. If KeyGhost can capitalise on its advantages as a tamper-proof hardware alternative, that's one enormous target market.

Its only hardware competitor is Microsoft's MicroSpy, which is unencrypted and has capacity for only 10,000 keystrokes.

Advertising has been minimal, the company generating interest through its website (www.keyghost.com) and positive product reviews.

A helping hand has come through the company's participation in the Canterbury Development Corporation's high-tech business programme, offering young companies wide ranging business advice and mentoring support, and financed through Jim Anderton's Ministry of Economic Development.

A $7000 Government grant has also helped cover early costs.

It is a somewhat prosaic means of ensuring most of the ghosts in the world's machines are Kiwi.