A key plank of the recent corporate activity in the US has centered on the acquisition of software companies that specialise in virus protection and cyber security breaches.

Just recently Intel announced plans to purchase McAfee, the US software security company for US$7.68 billion dollars. This is the largest acquisition made in Intel’s history in a move prompted by the rising threat from viruses as the internet spreads to more mobile devices and everyday appliances.

The acquisition is Intel’s largest ever, easily surpassing its 1999 takeover of Level One for $2.2 billion. And just like that, Intel is a player in the security software and services market.

Intel’s agreement to acquire McAfee underscores that security is a fundamental component of modern computing and it is increasingly relevant in a completely connected world. The number of connected devices is expected to grow from one billion to 50 billion by 2020, reshaping communication, collaboration and commerce opportunities.

Intel noted while explaining the proposed acquisition that “cybercriminals and cyber terrorists are putting users at risk and the future of the internet as we know it in question”. By bringing McAfee’s security DNA to Intel, we can offer better solutions and products. “By next year, we will introduce new security offerings as a result,” they added.

Cyber threats and security attacks have been accelerating more rapidly each week. The US Pentagon’s computer systems are probed up to 250,000 times every hour and according to General Alexander, the head of the US unit in charge of this area, there are in excess of 140 foreign spy organisations trying to infiltrate US networks. That equates to six million times per day.

Recently, India requested Google and Skype to set up servers inside its borders in order to monitor voice traffic and emails. In Turkey, YouTube is banned and in Russia every line of code entering or leaving the country is copied into and stored in a central data storage computer which comes under the control of a division of the KGB.

Crime continues to escalate in the areas of commercial espionage and warfare. A European gang of hackers was recently arrested for writing a virus that allowed them to steal in excess of 70 million dollars from small businesses who are particularly vulnerable to this type of attack.

Verizon in the US recently reported that commercial espionage represents a third of illegal web activity.

Governments the world over are now taking the threat of cyber security much more seriously and we saw recent threats from the United Arab Emirates to cut off Blackberry services unless the owner, Research in Motion, lifted email encryption or set up local servers in order to ensure that the UAE could monitor traffic.

As the internet continues to advance into a powerful globally-driven commerce network, the threat of attacks of this nature continue to compound. Teams of well-funded individuals with coding and programming experience work around the clock to develop new computer viruses that are becoming increasingly prevalent and more difficult to decode and to prevent damage.

Hackers can set up programs that monitor online habits and behaviour. They can extract personal information including business plans, banking details, passwords and other private information that may be stored online.

Malware that monitors a user’s social network behavior and steal information are becoming more and more problematic for banks and other financial institutions. These increasingly sophisticated intrusions are also becoming more and more expensive to guard against and to combat.

Financial institutions run the risk of incurring massive ongoing costs as widespread online fraud becomes a growing problem, any Australian institution or Government should be discussing, collaborating and making plans to limit offshoring of their data, software and online commerce operations.

Australian companies that are in a position to offer onshore facilities, local backups and data centre management will see ballooning requirements for their services. Companies that can provide safe, secure system backup and redundancy will see their profits grow very rapidly.

The ASX recently disclosed that a large and continually growing part of their budgets and business planning was being devoted to technology across their units.

The ongoing discussions with the Singapore Stock Exchange will only amplify these issues and developments.

Australian businesses large and small need to revisit their current systems and capabilities. Boards that are devoting time to these critical issues right now are ahead of the curve and these are the companies to invest in along with the software and technology companies that are providing these services and are forging ahead in theses fields.

NextDC founded by Pipe Networks’ Bevan Slattery is an upcoming new listing that will deliver investors an excellent opportunity to partner in this growing sector of the market.

Independent market research indicates that data centre supply-side constraints are expected to continue, given a mix of factors including limited site availability, limited access to the expertise required in constructing and operating a data centre, and the essential significant upfront capital investment.


Cartoon by Eric Lobbecke

Source: The Australian

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Related articles

Simon Bond discusses the collateral damage from the mining boom.

Then, is the sun setting on the Land of the Rising Sun? Bond looks at the economic setting of Japan.

And how will China achieve global economic control? Bond shares his thoughts.