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Hacked off

29 December 2011 By Richard Beales

Cloud computing and cybersecurity are both hot, fast-growing markets. But faith in the cloud took a knock with outages at Amazon and elsewhere in 2011. And the hacking of targets from Sony to Hollywood star Scarlett Johansson, whose email was broken into, underlines the need for better security.

Keeping data and services on someone else’s servers in the so-called cloud – all the while just clicks away – means companies don’t have to invest up front. They pay for what they need, and scaling up is easy. Hence the fast growth observed by research firms like Forrester, which pegs the cloud market at more than $60 billion by the end of 2012.

But Amazon’s days-long outage in April was a warning. Even allowing for some downtime, the services offered by Amazon and other big cloud players may still be more reliable as well as cheaper than smaller companies can achieve independently. But when there is trouble, customers are left helpless.

Then there’s security, in the cloud or elsewhere. The possible hacking of tens of millions of Sony PlayStation users’ accounts led the company to take a financial hit of some $170 million. This kind of risk is one reason PricewaterhouseCoopers sees the cybersecurity market, which the firm puts at some $60 billion in 2011, still growing 10 percent a year despite tough economic times.

Security is a moving target, though. Companies handing out Research In Motion’s BlackBerries used to feel secure. But RIM’s devices are losing out to gadgets made or powered by Apple , Google and others – devices that are increasingly owned by employees rather than employers. This isn’t nearly so secure, something highlighted as a potential problem area in 2012 by the likes of Cisco Systems and Intel-owned security outfit McAfee.

Companies, governments and individuals have good reasons to use the cloud, and arguably better ones to spend more time and money on security. But the hardware, software and services firms involved, from giants like Amazon and Cisco to publicly traded specialists like Websense and smaller still-private upstarts, need to stay ahead of the threats if they want their customers to invest confidently and keep these markets growing fast.

PwC, for one, expects acquisitions in the cybersecurity sector to pick up further. For cloud or security firms that don’t evolve quickly enough, buying companies that do is one way to catch up in a hurry.

Predictions: Breakingviews is publishing a series of articles over the holiday that look ahead to 2012. The pieces will be collected together in the annual ’Predictions Book’, produced in print and electronic form early in the New Year.


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