Hackers create opportunity for military firms
on Google boost the market for cyber-security just as government
weapons spending is expected to slow. Military firms are retooling for
rising demand by corporations as well as government.
By W.J. Hennigan
January 19, 2010
U.S. military firms, the latest revelations of highly sophisticated
hacker attacks on Google Inc. are highlighting a new reality, and a
potentially lucrative business: The battlefield is shifting to
Google's admission last week that it and other large
companies were infiltrated by cyber-spies is bolstering prospects for
major military contractors that in recent years have been intensifying
their focus from developing weapons to defending computer systems and
"Cyber-security is shaping up to be a major growth
opportunity for the defense industry," said Loren Thompson, a military
policy analyst for the Lexington Institute, a think tank in Arlington,
Va. "We've spent the last 20 years putting all of our information onto
computers. Now, we don't have any choice but to defend ourselves
against foreign intrusion."
As the threat becomes more
coordinated and complex, military firms say that demand for
sophisticated cyber-security will rise. The attacks on Google alarmed
security analysts because it appeared that a new battle was being waged
in which corporate computers and the valuable intellectual property
they hold had become a target of a foreign government. In the past such
intricate attacks were primarily aimed at military and state secrets.
military industry, having already done extensive work protecting
federal government computers, may be in a good position in the emerging
market that could exceed $100 billion in revenue within the next
decade, analysts said.
It may have little choice. Pentagon spending on weapons is expected to
slow, leaving military firms scrambling for new business.
of these companies recognizes that growing demand for cyber skills
could help cover any shortfall in revenues," Thompson said.
federal government is expected to set aside $8.3 billion this year for
protecting its computers from hackers, up 60% from just four years ago.
In a speech last year, Deputy Secretary of Defense William J. Lynn said
that at the Pentagon alone, there were an "estimated 90,000 people
engaged in administering, monitoring and defending 15,000 networks
connecting 7 million computers."
With attacks increasing more
than 200% since 2006, federal spending on cyber-security is expected to
grow 8.1% annually over the next four years, according to Input, a
Reston, Va., government contracting research firm.
"That's significant growth, given the budget pressure that the
government is under," said John Slye, principal analyst at Input.
how much private firms are spending to protect themselves from hackers
is unknown, because many do not like to admit that their computers have
"In today's current state, there's a good chance
that you've already been compromised," said Timothy McKnight, vice
president of Northrop Grumman Corp.'s intelligence systems division.
"We want to stay ahead of this problem. We're doing everything to stay
on the cutting edge."
To bolster their staffs, military firms
have been hiring former top government officials, partnering with
universities for young talent and swallowing up smaller cyber-boutiques.
City-based Northrop, maker of the B-2 stealth bomber and nuclear
submarines, in 2007 acquired Essex Corp., which specializes in
encryption technology used by U.S. intelligence agencies that could be
applied to protecting valuable data.
Northrop last year
consolidated its cyber-security business, scattered among various
divisions across the country, into one unit.
And in December,
Northrop created a cyber-security research consortium with Carnegie
Mellon University, the Massachusetts Institute of Technology and Purdue
University as a way to tap new technologies and recruit emerging talent.
rival Lockheed Martin Corp. took a different route assembling a
cyber-security alliance with tech companies, including Microsoft Corp,
Cisco Systems Inc. and Dell Inc., to collaborate on developing measures
In November, the nation's largest military
contractor finished a 5,000-square-foot facility in Gaithersburg, Md.,
that's dedicated to cyber-security research. Lockheed has also
recruited Lee Holcomb, former chief technology officer for the
Department of Homeland Security, to head the company's cyber-security
Another military firm, General Dynamics Corp., has
built a lucrative business protecting companies from cyber attacks. In
2007, the company helped the parent of discount retailers T.J. Maxx and
Marshalls patch a security breach in which hackers had gained access to
computers that had information on 50 million customers' credit and
"Nobody is building aircraft carriers anymore,"
said James Mulvenon, director of the Center for Intelligence Research
and Analysis at Defense Group Inc., a national-security firm. "It looks
like, from now on, the big money is in cyber space."
2010 Los Angeles Times