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July 8, 2015

Editor John Miley image

John Miley

Greetings:

In this issue: Fighting off cyberthieves. Growing costs of cybersecurity. Advice from the Federal Communications Commission on new Web services. Lessons learned from the SpaceX rocket fail. The impact of the strong dollar on global information tech sales. Surprising buyers of smart-home technology. Slow-loading websites lose sales.

Shoring Up Your Cyberdefenses

Stepped-up cyberattacks are making computer security an increasingly urgent priority for businesses and government entities of all sizes.

"I believe that security is changing rapidly," says Earl Perkins, research vice president of integrated security and risk strategies at Gartner, an information technology research and advisory firm. The rapid rise of connected devices, from mobile phones to industrial sensors, is creating an ever-larger maze of interlinking connection points, each of which presents a potential security risk. "I've never seen more threat surface areas opening up," says Perkins. And since hackers are notorious for staying one step ahead of the defenses, public and private stewards of data are feeling the heat to develop even more-aggressive methods of protection.

One of the strongest ways to thwart cybercriminals is to keep critical data offline via air gapping, a network security technique that disconnects secure computer networks from unsecured ones. Creating such a virtually impenetrable "moat" goes a long way to protecting sensitive data, though even moats can be breached via advanced hacking efforts. A downside? Some computer tasks will take longer to perform and IT upgrades will be slower. Still, members of Congress are talking up air gapping as a way to protect government data bases in the wake of the devastating data breach at the U.S. Office of Personnel Management last month.

Another method: Segmentation, which separates computer systems from one another. Doing so reduces risk by isolating computer networks and limiting worker access to specific computers. Such quarantines can prevent human errors that often lead to preventable security lapses. It can also lower costs by focusing security spending on networks most at risk.

Predictive analysis can also be a useful tool, helping you to get a sense of where attacks might come next. Proactive methods can even lure attackers to certain systems. However, most businesses will shy away from doing so because of concerns about the legality of such practices, among other issues.

Expect both businesses and government agencies to show increasing interest in customized software platforms for handling upgrades across systems and devices. Such specialized software includes apps for truck scheduling or payment terminals, for example, and is frequently updated. "Whatever the future brings for new security standards or interfaces, they will work with our software," says Matt Calkins, CEO of Appian, a supplier of custom software. Other vendors include MicroPact and Bizagi.

But Cybersecurity Isn't Cheap

The cost of protection will be a growing burden as companies move to shore up security. Spending on cybersecurity measures in the U.S. is expected to rise 10% yearly through 2017, according to the Telecommunications Industry Association's 2015-2018 ICT Market Review and Forecast. That, of course, is good news for security companies, such as FireEye, which are seeing growing interest in their products.

Moreover, some companies will scrap or delay plans to collect data because they worry about breaches. Such moves are sure to have an impact on new business development -- and the bottom line. Breaches, especially leaks of customers' personal information, stoke fears over the collection and analysis of huge amounts of data. Federal, state and local governments will likely slow the rollout of digital services, while businesses are bracing for additional government regulation and customer revolt over security lapses.

More personal privacy protections, especially greater transparency, are likely by businesses intent on collecting and mining customer data. "We need to make as much noise about the good benefits of big data, rather than focus on the bad," says Jason O'Connor, vice president of analysis and mission solutions at Lockheed Martin, the global aerospace and defense giant. The firm also provides technology that can detect diseases using big data analytics.

Shopping on Facebook

New "buy" buttons on social media platforms spell new business for online sellers. Social media sites such as Facebook, Pinterest, Twitter and Instagram are rolling out one-click icons that let users buy a product or service instantly. The launches will eventually become a big business for participating sites, taking an ever-larger cut of overall online sales. Social media companies will also use the new e-commerce tools to entice users to spend more time on their sites. The largest group of likely shoppers on social media sites? Millennials, according to recent research. Along with digital files, such as music and e-books, sales will run the gamut, from monthly wine subscriptions to home appliances.

For the first time, e-retailers will be able to get clear-cut sales data from social media. Firms can monitor sales on their own social media pages or through paid advertisements, rather than using iffy metrics such as "likes." Picking the right site is key to reaching buyers. "Buy buttons mean nothing if you're in the wrong place, talking to the wrong people," says Nora Barnes, professor of marketing and director of the Center for Marketing Research at the University of Massachusetts Dartmouth. The Pew Research Center has useful demographic data of popular social media sites.

Regulators Are Here to Help

The Federal Communications Commission is offering its clearest advice yet on how it plans to police Internet business practices now that net neutrality rules are on the books. But the guidance only spells more uncertainty and figures to slow down certain Internet business decisions. The FCC will issue "advisory opinions," which are nonbinding findings on what is and isn't allowed under its new Internet rules. But there are industry concerns about the FCC move. For example, though firms can ask the commission for its thoughts on whether a certain Web practice is allowed, there's no guarantee the FCC will respond. Companies also fret about tipping off competitors by communicating their plans with the commission. Still, with more and more wired and wireless Internet providers curbing certain practices for fear of being regulated, or worse, fined, they may be more willing to work with federal regulators up front.

Note that net neutrality rules will also play a bigger role in telecom mergers. The FCC will soon approve the AT&T-DirecTV merger with net neutrality strings attached.

Fallout From the SpaceX Fail

The difficulty of launching successful space missions was underscored during last week's SpaceX rocket failure. The explosion of an unmanned cargo rocket destroyed 4,000 pounds of supplies, payloads and experiments. The failure will affect SpaceX's satellite customers, including SES, Orbcomm, Eutelsat and Iridium.

SpaceX is aiming to complete its investigation and correct problems in four to six months, according to Chris Quilty, satellite and space analyst at Raymond James, a financial services firm. The delay of coming launches while SpaceX deals with the failure (on the heels of 18 straight successful launches of its Falcon 9 rocket) won't be a big setback for the company. It has a backlog of 50 missions, valued at $7 billion.

Meanwhile, satellite start-ups continue to see large investments. OneWeb, which is aiming to build low-cost global broadband service, recently received $500 million in funding. And Spire, which will use its satellites for weather and logistics tracking, has received another $40 million.

Tech Tidbits

The strong U.S. dollar continues to cut into global IT sales. Market research firm Gartner predicts global sales will fall in 2015 by $200 billion, or 5.5%, compared with last year. Sellers of software and communications equipment will try mightily to raise prices to sustain profit margins.

The biggest buyers of smart-home gear often don't own a home. Millennials, many of whom are renters, will account for the majority of purchases in coming years. Four in 10 folks ages 18 to 34 are interested in smart-home products, according to an NPD Group survey.

Slow-loading websites are a quick way to turn off customers. Websites are now 40% larger than they were this time last year. Sites that take too long to load cost companies billions in e-commerce sales. The biggest problem: Large images.

Sincerely,
John Miley signature
John Miley
jmiley@kiplinger.com
@johntmiley

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