Aladdin Study Finds Web-Based Threats Grew 1,300 Percent in 2006, Spyware on a Mission

Aladdin Malware Report 2006 details massive growth in complex spyware and Trojans, dramatic decrease in viruses and worms

CHICAGO, January 31, 2007 - Aladdin Knowledge Systems Ltd.
(NASDAQ: ALDN) the leader in Software DRM, strong authentication and content security solutions, today announced that the Aladdin Content Security Response Team (CSRT) released an annual study that marks an enormous 1,300 percent growth of Web-based threats in 2006. The number of Web-based threats grew from 7,188 in 2005 to 98,020 in 2006. Spyware and Trojans gained through visiting Web sites clearly topped the charts of the most dangerous threats.

To download a complete summary of the Aladdin Malware Report 2006, visit www.Aladdin.com/CSRT.

Spyware Growing More Complex, Spyware on a Mission

The Aladdin Malware Report 2006 finds that 149,221 new instances of individual malicious code were identified in 2006, representing a 900 percent jump from 16,623 in 2005. With spyware and Trojans representing the majority of new threats, the report notes their vast complexity and increased threat level that quickly grew throughout 2006. In fact, 60 percent of spyware and Trojan information theft in 2005 was categorized as "reduced threat" (Commercial Information Privacy Compromise). In 2006, Most Trojans and spyware variants detected were engaged in "medium" (computer and Operating System privacy compromise) to "critical" (end user privacy invasion and information theft privacy compromise) activity.

Boundaries between Threats Quickly Fading

Boundaries between spyware, Trojans, key loggers and spammers are fading fast. Spyware activities in 2005 typically collected commercial information from user activities through targeting ads. Today's spyware activities include an array of malicious efforts, including the creation of backdoors on infected machines, the collection of personal user information, extensive logging of keystrokes, and transforming infected machines into spamming bots:

• 65 percent of spyware also engaged in Trojan activity
• 30 percent of spyware also engaged in spam activity
• 15 percent of spyware also engaged in key logging activity
• 10 percent of spyware use root kit techniques to evade detection

Social engineering pop ups misleading users to install rogue software continue to get more sophisticated. The Aladdin report notes a sharp increase in drive-by propagation methods and damages to the hosting operating systems. Throughout 2006, 95 percent of newly published zero-day Web related exploits immediately were immediately used by rogue anti-spyware vendors and partners. Many variants caused irreparable damage to their hosting operating system.

"The Aladdin Malware Report 2006 clearly shows that ever-evolving and changing Web threats require protection far beyond what traditional security solutions provide," said Shimon Gruper, vice president of technologies for the Aladdin eSafe Business Unit. "Proactive, deep inspection of Web content is key to keeping your organization free from unknown threats that are often blocked too late. Now, with threats making it past traditional defenses, even Web browsing can stand as a dangerous activity without comprehensive inspection of all Web content."

The Aladdin Content Security Response Team (CSRT) is led by Aladdin's top security analysts within the Aladdin eSafe Business Unit. The team heads the Aladdin eSafe Security Threats Lab and frequently releases its findings. Aladdin serves as a member of Microsoft's Virus Information Alliance, AVED (Anti Virus Emergency Discussion Group), the Wild List organization and CME (Common Malware Enumeration). For more information, visit www.Aladdin.com/CSRT.

About Aladdin

Aladdin Knowledge Systems Ltd. (NASDAQ: ALDN), founded in 1985, is a global provider of security solutions. Its security products are organized into two segments: Software Digital Rights Management (DRM) and Enterprise Security. Aladdin's Software DRM products allow software developers and publishers to protect their intellectual property, increase revenues through licensing, and reduce losses from software piracy. Aladdin's Enterprise Security solutions enable organizations to secure their information technology assets by controlling who has access to their networks (identity and password management) and what content their users can utilize (proactive content security). Aladdin has offices in 10 countries, a worldwide network of channel partners and holds numerous industry awards for innovation and reliability. For more information, please visit the Aladdin Web site at www.Aladdin.com.

©2007 Aladdin Knowledge Systems, Ltd. All rights reserved. Aladdin Knowledge Systems and the Aladdin logo are trademarks or registered trademarks of Aladdin Knowledge Systems, Ltd. All other product and brand names mentioned in this document are trademarks or registered trademarks of their respective owners.

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