David Kuo: Cloud cybercrime has silver lining for shareholders

Investment Insider

As an investor, did you know you can make money from cybercrime? Protecting customers from having their accounts hacked is a multibillion-pound worldwide business.

The inordinate lengths that banks have gone to to protect their customers is understandable. However, it is questionable as to whether online gamers would be as prepared to go to such extremes simply to play a quick game of football. With hindsight, and following the data breach at Sony, the answer is probably yes. However, it would seem that Sony, the maker of PlayStation games consoles, may have wrongly sacrificed strengthened security for the sake of ease in its attempts to make online gaming more consumer friendly.

Sony's apparent failure to protect its customers may have inadvertently put some 100 million PlayStation network customers at risk after computer hackers stole personal information belonging to these people. It is possible that Sony will face a lawsuit in the US for failing to take reasonable care to protect sensitive data belonging to its users. Sony's reputation has been put in jeopardy.

According to a recent government report, cybercrime costs the British economy about £27bn a year. About £21bn of the costs are borne by businesses; over £2bn by the Government and about £3bn by consumers.

Businesses cannot afford to ignore the threat of cybercrime, which is why internet security is big business. The services of companies such as AVG, Sophos and Barracuda Networks, which are privately owned, and Websense, which is quoted on Nasdaq, are in demand. Symantec, which is also quoted on Nasdaq, provides security and storage systems to help businesses and consumers secure and manage their information. Symantec reported profits of $714m on sales of almost $6bn last year.

And on the horizon is cloud computing, described as the next stage in the internet's evolution. With cloud computing, individuals and businesses will be able to call on computing power infrastructure whenever and wherever they need it.

Businesses will need to take greater responsibility for protecting data in the cloud, which could mean even greater demand for cyber security. Regardless of how secure a lock may be today, it can always be picked tomorrow. The challenge for businesses is to stay one step ahead of tomorrow's lock pickers.

David Kuo is a director of fool.co.uk

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