Feeds

More than $60bn spunked on cyber-security in 2011

Investors, defence contractors, tech firms frolic in cash bath

Choosing a cloud hosting partner with confidence

Global cyber-security spending is on track to exceed $60bn for 2011, according to a study by management consultants PwC.

The growing tide of cyber threats, coupled with greater vulnerabilities due to the more pervasive use of technology – particularly mobile devices and cloud computing – are fueling a growth in cyber-security spending. Increasing regulations, particularly those enforcing the requirement to secure personal data, as well as outsourcing, are also having an effect. Spending on cyber security is set to grow 10 per cent year on year for the next three to five years. UK cyber-security spending alone is expected to reach nearly £3bn in 2011.

This, in turn, is driving increased spending in the market by a variety of different players. Investors, defence contractors, IT services, mainstream technology firms and others all want a slice of the action, according to PwC. The United States, Japan and UK are three main deal markets for cyber security.

Cumulative spending on cyber-security deals since 2008 totals nearly $22bn, an average of over $6bn in each year, according to PwC. Notable deals include Intel’s $7.8bn acquisition of McAfee, which completed in February 2011. Other mega deals (with values of $500m or above) since 2009, including Dell’s acquisition of Secureworks in 2011 and Apax Partners’ acquisition of Sophos in 2010. Other notable deals include BAE's acquisition of Detica, defence contractor Raytheon snapping up Applied Signal Technology, Symantec's purchase of MessageLabs and HP's acquisition of security tools firm ArcSight.

Deal value-to-revenue ratios for the numerous infosec sector deals evaluated by PwC between the start of 2008 and the middle of this year came in at a multiplier of between two to three, higher than accounting fundamentals would suggest the acquired firms were worth. These figures are a "clear indicators that acquirers are willing to pay a premium to buy cyber-security companies", PwC reports.

PwC's study, Cyber Security M&A: Decoding Deals attempts to explains the motives of various players either entering into or expanding their presence in the infosecurity market.

Fewer helicopters, more firewalls

Defence contractors are seeking to diversify away from core defence markets, which are forecast to decline over the next few years. In addition, there is a "structural trend in government spending away from defence and towards security", as PwC puts it.

“Deal activity in cyber security is expected to continue to grow given the fragmentation of the market and the attractive growth outlook, said Barry Jaber, PwC’s UK-based security industry leader. "Technology and IT companies are making acquisitions to differentiate their offerings while defence firms continue to do deals to diversify away from shrinking defence budgets,” he added.

In most countries, the private sector accounts for the majority of cyber-security spending. However in the US, government spending is almost equal to that of the private sector. The strong US technology industry combined with the fact that US defence and intelligence budgets are significantly larger than in any other country are key market drivers. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Download alert: Nearly ALL top 100 Android, iOS paid apps hacked
Attack of the Clones? Yeah, but much, much scarier – report
You stupid BRICK! PCs running Avast AV can't handle Windows fixes
Fix issued, fingers pointed, forums in flames
Microsoft: Your Linux Docker containers are now OURS to command
New tool lets admins wrangle Linux apps from Windows
Facebook, working on Facebook at Work, works on Facebook. At Work
You don't want your cat or drunk pics at the office
Soz, web devs: Google snatches its Wallet off the table
Killing off web service in 3 months... but app-happy bonkers are fine
First in line to order a Nexus 6? AT&T has a BRICK for you
Black Screen of Death plagues early Google-mobe batch
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Driving business with continuous operational intelligence
Introducing an innovative approach offered by ExtraHop for producing continuous operational intelligence.
10 threats to successful enterprise endpoint backup
10 threats to a successful backup including issues with BYOD, slow backups and ineffective security.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?