Why the Cybersecurity Market is Even Bigger Than We Thought

There’s no doubt about it: cybersecurity is a hot market right now. Indeed, there’s a chance that it’s even hotter than analysts realize. Using new new data from Cybersecurity Ventures, we investigated the reasons why companies are under reporting their cyber spending, and why cyber is more necessary than ever. The data all points to one conclusion: the cybersecurity market will continue to grow in coming years, to an extent which might even surprise the industry’s closest observers.

Market growth

Once upon a time, companies viewed cybersecurity measures as an unnecessary expense. Today, cybersecurity forms an essential part of most companies’ IT spending, with c-suite executives and boards of directors pushing for ever more cyber protection. The increasing prevalence of cybercrime, the transition towards potentially vulnerable Internet of Things devices, and the spike in ransomware, and the ever-evolving sophistication of the hacking community have created enormous demand for cybersecurity platforms across all industries. And luckily, the market’s increasingly sophisticated, targeted, and affordable cyber solutions are mean that investment in this area is getting more payoff than ever.

Because of this shift towards increased cyber spending, the market is booming. Indeed, Cybersecurity Ventures predicts that worldwide spending on cybersecurity products and services will eclipse $1 trillion for the five year period between 2017 and 2021. In other words, the market is anticipated to see 12 to 15 percent year over year growth through 2012.

Analyst discrepancy

However, not all analysts predict that the market is going to grow at this rate. Steve Morgan, founder and Editor-in-Chief of Cybersecurity Ventures, states that many industry analysts are anticipating eight to 10 percent growth in the next five years (rather than 12 to 15 percent). So what explains the discrepancy in market predictions?
A large part of this can be attributed to the fact that many corporations are hesitant to reveal cyber breaches that they have suffered (and their consequent increases in cybersecurity spending) for fear of reputational damage. This hesitation is telling: cybersecurity is no longer just an IT concern. Marketing and branding efforts are also severely impacted by the public’s perception of a company’s security measures. Despite occurring as far back as 2013, hacks to Target (NYSE:TGT), Home Depot (NYSE:HD) and Sony Pictures Entertainment (NYSE:SNE) are causing lasting repercussions for these companies, in terms of both financial cost and customer loyalty.

Shifting market

Now, the tides are turning, as companies become more upfront about their increased commitment to cybersecurity measures. For instance, J.P. Morgan Chase & Co. (OTCMKTS:JFTTL) revealed that it has doubled its annual cybersecurity budget from a respectable $250 million to half a billion dollars. This increased openness about cybersecurity spending suggests that analysts might soon amend their projected estimates about cybersecurity market growth. Not only will this present a more accurate view of the market’s future, it could also encourage other companies to continue committing resources to cybersecurity measures.
All told, the market is growing, whether we see eight percent year-over-year growth or 15 percent growth. Investors in this area have a lot to look forward to, as companies continue to pour more and more resources into this rapidly growing and increasingly essential market.
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Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.