Mobile Security Spending To Rise Through 2015

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by: Investment U

By Justin Dove

As smartphone use increases in what’s sometimes called the “biggest tech trend ever,” hacking and security breaches are bound to increase, too.

Last week, Canalys released a report estimating an average investment growth of 44.2 percent per year in mobile security spending. By the end of 2011, investment in mobile security will reach $759.8 million. Canalys predicts it will turn into a $3-billion market opportunity by 2015.

IDC and Infonetics Research aren’t quite as bullish on the growth, but they do expect a moderate increase. Both recently predicted global spending on mobile security is on track to reach about $1.9 billion by 2015.

The IBM (NYSE: IBM) X-Force research team also recently released a prediction that mobile phone security threats will double by the end of 2011. Between the summers of 2010 and 2011, the volume of Android malware increased by 400 percent.

“For years, observers have been wondering when malware would become a real problem for the latest generation of mobile devices,” said Tom Cross, Manager of threat intelligence and strategy for IBM X-Force, in a statement. “It appears that the wait is over.”

Smartphone Security Vulnerability

Part of the problem is the vulnerability of today’s smartphones. Canalys reported that only four percent of smartphones and tablets shipped in 2010 had any security software pre-installed.

Canalys forecasts that by 2015, over 20 percent of smartphones and tablets will have mobile security software pre-installed.

Physorg.com reported that a recent Symantec survey of 12,704 respondents in 24 nations found that only 16 percent installed the most up-to-date security on their devices, while 10 percent reported being the victim of a mobile-related cyber crime.

Emerging economies in Latin America, Asia, Africa and the Middle East are expected to experience a sharp rise in mobile security investment from 2013 to 2015, Canalys predicts.

Canalys is expecting “a strong parallel to emerge between Android operating system growth and the volume of mobile malware threats, as the potential for more people to download compromised applications rises.”

Mobile Security M&A

The bigger companies have already seen this trend coming.

Over the last year or two, there has been a surge in mobile security mergers and acquisitions (M&A).

  • Juniper Networks (NYSE: JNPR) bought S mobile.
  • Symantec (Nasdaq: SYMC) bought GuardianEdge, plus parts of the Verisign acquisition to aid its mobile security offering.
  • McAfee bought Tencube and Trust Digital.
  • Intel (Nasdaq: INTC) bought McAfee.

Investing in Mobile Security

Lookout Mobile Security is one of the leaders in the industry, with rapid growth and 12 million users. However, Lookout is currently private and just received s a $40-million funding round led by Andreessen Horowitz. Considering Lookout doesn’t appear to be going public anytime soon, there are other options to invest in mobile security:

  • Symantec, which produces Norton Anti-Virus, is trying to carve out its niche in mobile security.
  • Intel now owns McAfee, which offers several mobile security products.
  • Juniper Networks recently announced it partnered with AT&T (NYSE: ATT) to provide a mobile security platform for AT&T customers.
  • Cisco Systems (Nasdaq: CSCO) also makes a mobile security app called Cisco SIO to Go.
  • Trend Micro (OTC: TMICY.PK) is a Japanese company that’s very active in mobile security. It offers paid products such as: Trend Micro Titanium Tablet Security for Android, Mobile Security Personal Edition™ and Smart Surfing for iPhone and SafeSync™ Mobile. It also has various free applications, such as HouseCall, CWShredder, Smart Surfing for the iPhone, ThreatWatch App for iPhone, RUBotted, Rootkit Buster and HijackThis.

Whether the market grows to $2 billion or $3 billion, mobile security investments will certainly grow over the next four years. Smartphone use will only expand, and as with the internet, the more it expands, the more predators it will attract. Keen investors may want to watch out for companies that emerge as early leaders when spending and awareness starts to ramp up.

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