IoT security spending is set to increase by nearly 30% this year. Cybersecurity startups to benefit from surge in investment as funding is expected to soar.
“Internet of Things” security spending is currently a relatively small market, but analyst firm Gartner estimates worldwide spending on IoT security will increase by 23.7% in 2016, to reach $348 million, compared to $281.5 million in 2015. Large network and security vendors are set to benefit from this surge, but startups are also very active in the space. Indeed, “cyberphysical” security startups last year attracted $228 million in venture capital investments, a 78% year-on-year increase, according to Lux Research. The analyst firm forecasts VC investment in cybersecurity startups will reach $400 million in 2016, driven by growth in the IoT market.
“With rapid adoption of ‘Internet of Things’ in products ranging from connected cars to industrial workplaces, the need to secure cyberphysical assets is growing,” Lux Research said.
Cost and the lack of adequate security solutions are noted as factors responsible for the weak adoption of IoT security. Potential threats to IoT assets should however be taken seriously as they potentially threaten the integrity of critical infrastructure, the research firm said.
“Connected consumer and business products have begun flooding the market, but security has been an afterthought. The world now has to figure out how to secure the multitude of things that have recently become connected,” said Mark Bünger, VP at Lux Research, and author of the report.
U.S. startups account for nearly half and Israel-based startups for one-third of the 77 IoT security startups assessed in the report. Over half of the startups in question are providing horizontal security platforms capable of supporting multiple types of IoT devices and environments. Looking specifically at security, startups are mostly working on device behavior analysis, network behavior analysis, methods for performing authentication and encryption in IoT environments.
Drivers to IoT security adoption
Gartner predicts that by 2020, more than 25% of identified attacks in enterprises will involve IoT. Yet, IoT security is still often neglected by both consumers and enterprises.
“The ‘Internet of Things’ is only as strong as its weakest link, and it is important to fully understand what an interconnected environment means,” said Adam Fingersh, SVP and GM of Experian’s fraud and identity business. “Opening products and services to the Internet dramatically increases the opportunities for cybercriminals, who can hack those products to get into your broader systems.”
The company has designed a short guide underlining how consumers and businesses can manage risk and increase security with IoT products.
Compliance with regulations is expected to help drive the IoT security market, but the high total cost of ownership and the lack of standardized and integrated solutions are still often pointed out as major hurdles. Each connected device is a potential backdoor for hackers and should have security built in at its core. A recent survey by U.K. manufacturers’ organization EEF, found that while 62% of U.K. manufacturers had plans to increase their investments in Internet-connected capital equipment in the next five years, only half had increased their investment in cybersecurity in the past two years and only one-third have an incident response plan for cyberattacks.
However, Gartner expects this to change. The IoT security market spending should start to increase at a faster rate after 2020, thanks to better skills, organizational change and more scalable service options, the firm said.
IIoT news recap: Orange joins LoRa; EY and GE form IIoT alliance; autonomous driving: green light in the UK and disorganization in the EU; Samsung invests in Afero; Fitbit acquires Coin’s wearable payments assets
Autonomous driving: Britain paves way for driverless cars
The U.K. government announced plans for new motor insurance laws that would favor investments in driverless cars, Reuters reports. In addition to drivers, insurance will cover product liability, ensuring driverless car owners’ full coverage in case of accidents.
Autonomous driving: carmakers frustrated at EC’s disorganization
While the U.K. is expected to pass new laws that will enable driverless cars onto the country’s roads, Euractiv reports car manufacturers are getting increasingly frustrated at the European Commission, complaining that “in-house divisions at the European Commission are delaying technologies like driverless cars from getting onto European streets.” One of the issues is there are several directorates generals within the EC involved in decisions on driverless cars: DG Move (transport), DG Grow (single market) and DG Connect (digital).
LPWAN: Orange joins fast-growing LoRa Alliance as board member
Following a successful test of the LoRaWan protocol in Grenoble, France, Orange announced it is joining the LoRa Alliance as a board member in order to drive the global success of the LoRaWAN protocol. The company said it is the largest operator adopter of the LoRaWAN standard to date. ”
LoRa Alliance and LoRaWAN meet customers feature expectations, our business model and has the largest LPWAN eco-system,” said Mari-Noëlle Jégo-Laveissière, senior EVP for innovation, marketing and technologies at Orange. The LoRa Alliance has grown to over 300 member companies in just about a year.
Wearables: Fitbit into NFC payments with Coin acquisition
Wearables market leader Fitbit acquired the wearable payments assets of financial technology company Coin. In a statement, Fitbit said they had no plans to “integrate Coin’s wearable payments technology into the 2016 Fitbit product roadmap,” though the acquisition would accelerate the company’s ability to develop an active NFC payment solution embedded into future devices.
Alliance: GE’s Predix gets a boost as EY, GE Digital team up on IIoT
EY and GE Digital announced they would enter a strategic alliance to develop and provide industrial IoT services to industrial companies using GE’s Predix cloud-based operating system. “The services can help companies reduce operating expenses and increase revenue through improved machine uptime and streamlined industrial workflows,” said EY.
Startups: Samsung Catalyst Fund leads $20.3 million series A financing in Afero
IoT platform Afero raised $20.3 million in a series A financing round led by Samsung Catalyst Fund. Other investors included SoftBank Group, Fenox Venture Capital, Presidio Ventures, Sanshin Electronics, Robert Dobkin and Assembly Partners. Afero was founded by veterans from Apple, Amazon.com, Danger and Nest, and went live in December 2015, after 18 months of development.
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