Celestix Networks this week is introducing a security appliance built on Microsoft's Internet Security and Acceleration Server 2004 that is designed to give users firewall, VPN and Web caching capabilities in one box.

The company will introduce three versions of its Multifunction Security Appliance (MSA) - the 2000, 4000 and 5000. The appliances are tailored for small, midsize and large businesses.

Microsoft released the Standard Edition of Internet Security and Acceleration Server (ISA) 2004 earlier this year. The ISA Server promises improved network security and performance by delivering better application security, simplified management, tighter integration and faster caching, Microsoft says. The ISA Server is designed to help users protect Microsoft applications such as the Exchange e-mail server, Internet Information Services Web server and SharePoint collaboration tools.

Several vendors are developing hardware appliances with the ISA 2004 at their core, including Network Engines, Pyramid Computer, RimApp Technologies and Wortmann AG. HP already has released the ProLiant DL320 Firewall/VPN/Cache server appliance, which features the ISA software.

"We think the security appliance market is an eventual trend, but it will develop in fits and starts," says Earl Perkins, an analyst with Meta Group. That is the case, Perkins says, because users still have not decided just what security functions they want to commit to an appliance.

With the 2004 version of the ISA, Microsoft added new application-layer filtering and firewall capabilities, multiple-network configurations and real-time monitoring of log entries to answer critics who said the firewall was not ready for prime time. The ISA 2004 also is integrated with Active Directory so users can apply group- and user-level controls to firewall policy and VPN authentication.

"Arguably [an appliance vendor] could ship a more secure and tightly configured implementation than if you installed it out-of-the-box and deployed it on your own server," says Peter Pawlak, an analyst with independent research firm Directions on Microsoft. "But I think these appliances are not as much for large corporations as they are for smaller companies."

Celestix is taking advantage of the improvements and adding some of its own to MSA, such as TCP/IP tweaks to protect against denial-of-service attacks and a Web-based interface.