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How Many Billions will be Spent on IoT Security?

By August 31, 2015Article

In a recent SandHill article, I reported that the Internet of Things (IoT) security market is expected to grow to nearly $30 billion by 2020. Research firm Gartner forecasted approximately 25 billion connected things will be in use by 2020. 

VCs need metrics when they contemplate investments … and startups need metrics to pitch the VCs. So we rounded off to $1 per connected thing for market projection purposes. That means one dollar will be spent on cybersecurity for every Internet-connected thing. 

You can argue the “spending per connected thing” figure up or down, but it is a key figure to help size the market. Move it down to 50 cents, push it up to two dollars; but use it. 

The other key figure is the number of “Things” that will need to be secured. Gartner’s numbers seemingly refer to Things that will connect to corporate networks, i.e., smartphones, tablets and the like. 

To expand on “Things,” you might think more along the lines of “anyThing” or “everyThing” because that is where we are headed. The natural starting point would be mobile devices including smartphones, tablets and other consumer electronics. 

To really start sizing the total market opportunity, we need to look at Things connecting to the Internet. Let’s use cars as an example. There are currently more than one billion cars on the road globally, with estimates for as many as two billions cars by 2035. New cars with GPS and other connectivity are rolling out of factories today. What percentage of cars will connect to the Internet by 2020? That’s just one big batch of Things. 

Do you think this is just pie-in-the-sky forecasting? Think again, because all these connecting Things – like cars – pose real cyber threats. Just a month ago, federal regulators launched an investigation into Fiat Chrysler Automobiles recall of 1.4 million vehicles with a potential cybersecurity flaw. 

What other Things? Pick anyThing. How about doorbells? Hook ‘em up to the Net and track how many times yours gets rung every week, month, year; add in finger-sensing devices using biometrics and track who rings your bell. Then lop on 50 cents per doorbell for security. Pet collars? Surely there’s a startup out there that will come to market with a collar that connects up to a Google Earth-like view of who snatched your Chihuahua.  

We can speculate on a never-ending number of Things that will connect to the Internet – medical devices, smart watches, toasters, refrigerators ad infinitum – and the numbers really get out of hand. Every Thing that connects to the Internet becomes a target for hackers, or in some other way ties into (cyber) crime. Clearly you can project more per Thing for cars than watches; but the point is it will cost something to protect each Thing. 

The IoT security market is expected to be nearly $7 billion for 2015, according to a new market report from Markets and Markets. 

Let’s look at some hot companies that play in this burgeoning market. 

Here are five hot players in five different sectors of the IoT security market. The list is merely a starting point for potential investors in the space to get a grip on the IoT security vendor landscape. Each of these categories, and others, represent opportunities to invest in startups.  

  1. Automotive. TowerSec, based in Ann Arbor, Mich., is a leading global automotive cybersecurity vendor specializing in delivering onboard cybersecurity technology to OEMs, suppliers and telematics unit and service providers. Tom LaSorda, former CEO of Chrysler and Fisker, told Automotive News his venture capital fund IncWell invested in TowerSec. 
  2. Corporate IT. Nexusguard, with its U.S. headquarters in San Francisco, is a leader in DDoS protection in the corporate IT security space and is turning its attention to IoT devices. A DDoS attack is an attack on an online service or website that attempts to make it unavailable, or deny service to regular users. “By its very design, the Internet of Things is built with lightweight security,” explains Terrence Gareau, chief scientist, Nexusguard. “The fact that they are also “always online” makes them highly susceptible to intrusion and attacks,” adds Gareau. 
  3. Industrial automation. New York City-based Bayshore Networks’ award-winning, patented Bayshore IT/OT Gateway deploys as a cloud-based platform, providing Fortune 1000 industrial enterprises with unprecedented visibility into their networks. It enables secure IoT and OT data and transactions in manufacturing operations, robotics automation, and M2M communications. 
  4. Mobile apps. Mocana, a San Francisco IoT company, provides an award-winning enterprise mobile app security platform to organizations with an easy way to deliver business-critical mobile apps with a high-quality end user experience, tap-and-go simplicity and strong security for internal and external users. Mocana’s customers include Fortune 50 enterprises, government agencies and the world’s leading smart device manufacturers. 
  5. Smart devices. AXON Ghost Sentinel, Inc. out of Harrisonburg, Va. created a new technology based on swarm intelligence and advanced peer-to-peer processing techniques that can protect phones, computers, cars and more. It can detect and stop threats as they happen without draining battery life or interfering with how people use their devices. 

So, how many billions will be spent on IoT security? Do your own math and tell us what you think. 

Steve Morgan is founder and CEO at Cybersecurity Ventures and editor-in-chief of the Cybersecurity Market Report and the Cybersecurity 500 list of the world’s hottest and most innovative cybersecurity companies. Follow Steve on Twitter or connect with him on LinkedIn.







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