Starian, the company founded by Eric Blossom and others, had a 3DES unit the size of an external modem that worked as described. (I have one.)
The problem is the "fax effect": who ya gonna call?
No, in the case of Starium, the problem is decidely not the fax effect. The problem is that they aren't selling them! You can't buy one, which basically guarantees that no one you call will have one. A corollary to this problem often affects high-tech companies: they have an awesome new technology, but they haven't sorted out how to market it.
It works well for "cells" consisting of trading partners, drug dealers, freedom fighters, etc. They can just buy several of them for their members.
Perhaps those groups have some use for these things, but in my case, I would create a "cell" of two: me and my lawyer. Client-attorney communications are legally protected; this just provides a technical means to implement an established, almost sacrosanct legal protection. If those guys were smart, they would read Crossing the Chasm, and pick a small target market to market to, and lawyers and their clients might be a good one.
Solving the fax effect problem happens when a _standard_ is widely deployed, or when some major deals with cellphone vendors happen. I understand Starian has been trying to get a cellphone version designed-in.
I don't think that's true at all! A company with huge resources (like Miscrosoft) can solve the fax effect by creating standards (often "closed" or proprietary standards) and getting things widely deployed by buying major partners, but that is certainly not the only way to do it. You don't need a lot of resources or a wide deployment to solve the fax effect. I imagine that the fax machine overcame the fax effect when a company with, for example, an east coast and a west coast office bought two of them and then could send documents coast to coast in seconds. They didn't care that no one else had one; it was boosted productivity immediately. Let's say that for some reason a company needs to send documents within 24 hours, and the only two options are couriers on flights, or this new-fangled fax machine. A pair of fax machines pays for itself within the first few documents that need to be sent, even if no other fax machines exist in the universe. Sooner or later, there will be a bunch of companies with two offices which use these things internally, and then one day, in a blinding flash, someone at Company A needs to send a document to Company B, and remembers that his friend there mentioned that they also have a "telphone facsimile machine", and in an instant, the world changes forever!
ObSpoliationClaim: "Those who buy such machines are obviously trying to hide evidence. Mr. Happy Fun Court is "not amused.""
That is very true. Someone trying to defeat a charge of being a boss in a drug gang would certainly not be helped if they found Starium units in his house and in houses of people who were distributing drugs. This would look bad for Starium, too. That's why they should go after a market that involves communications which are already legally protected: lawyer-client calls, law enforcement agency internal use, multinational corporations remote offices, perhaps some token human rights workers. If 95% of the users are socially acceptable, it won't matter that there are 5% who aren't. If 95% of the users are socially unacceptable, it won't matter if Mother Teresa and the Pope are the other 5%, because the thing will get banned. In my humble opinion, the c'punks would be a lot more interesting if they spent more time talking about marketing and PR and a lot less (perhaps none) time talking about silly legal points and technical hacks. Do you want to be right, or do you want to win? Put it another way: do lawyers spend a lot of time coming up with obscure legal arguments for why their client is not guilty, or do they spend a lot of time on jury psychology? Because ultimately the law is enforced by jurors who make emotional decisions, and they base them on things like their judgement of the character of the people involved, more than they base them on obscure legal theories and incomprehensible technical points. Same goes for voters and cops, in fact.