Why You Should Keep An Eye On The Mobile Security Segment

Mobile devices, the chunky things that allowed us to take a call without getting up, were such a big deal just a few years ago. But as the days go by, they seem to be getting more and more capable, all the while becoming slimmer and cooler as well! No wonder then that today, they are being snapped up by kids, oldies and pretty much everyone in between.

Considering their broad adoption and usefulness, one would have thought that there’d be a ton of companies out there, taking care of security as we browse the net, shop, play, socialize, read, watch video, listen to music, or work (or any of the other stuff I forgot to mention!). But that isn’t the way we function it seems because most individuals are comfortable enough even without security and have limited knowledge of the consequences. So mobile security hasn’t really gained momentum, even in places like the U.S., where 70%+ of the population has a device.

Why Things Are Changing Today

The first and biggest reason is the increasing usefulness of smart devices. Because these devices are always connected, they are more accessible to viruses, unsafe sites, etc. Moreover, people increasingly use them for shopping, entertainment, to consume media, or make payments, and tend to save passwords on the device itself. This also increases the danger of identity theft. The fact that they are moveable items that can easily be stolen or misplaced makes them all the more susceptible.

So as the number of devices continues to increase, with smartphones, tablets, phablets, chromebooks, surfaces, smart watches, AR/VR devices, connected dashboards, smart home products and other IoT devices, more information gets online with greater scope for infection or attacks. IDC expects smartphone shipments to grow 4.2% in 2017 and 4.4% in 2018 with a 3.8% CAGR over the 2016-2021 time period.

Shipments are forecast to reach 1.53 billion units in 2017 and grow to 1.77 billion in 2021. Gartner expects global mobile phone shipments to grow less than a point this year and 1.6% in 2018 with the ongoing migration from feature phones to basic smartphones, especially from Chinese players, continuing.

As the personal stuff on them continues to increase, they start moving some of it to Alphabet’s (NASDAQ:GOOGL) or Apple’s (NASDAQ:AAPL) , Microsoft’s (NASDAQ:MSFT) or Amazon’s (NASDAQ:AMZN) cloud, meaning that increasingly, personal information is moving on the network, from where it might be tampered with. According to the Cisco (NASDAQ:CSCO) Visual Networking Index, global mobile data traffic grew 63% in 2016, of which video traffic accounted for 60%. The Middle East grew 96%, Asia/Pacific 71%, Latin America 66%, Central and Eastern Europe 64%, Western Europe 52% and North America 44%.

It forecasts global mobile data traffic increase of 7x between 2016 and 2021, representing a 47% CAGR with nearly three-quarters of all devices on the network being smart by the end of the period. The Middle East will grow strongest at a 65% CAGR, followed by Asia/Pac at 49% and Latin America at 45%. China traffic will outpace the U.S. this year.

The digitization of banking services and online storage of healthcare information are two megatrends that also increase the risk of information loss. In fact, these two segments deal with critical information and are therefore under greater pressure from both regulators and customers to maintain a high level of security and privacy.

The virtualization of corporate workloads and bring your own device (BYOD) megatrend will completely change security as we know it. That’s because hackers (ransomware) and other Internet crooks can’t make as much money from individuals as they can from companies, governments and government bodies.

Moreover, organizations have more to lose than individuals in case of data breaches (i.e. data, reputation, business loss from incapacitation), so they are more concerned about protection. In fact, companies like Microsoft and Google have regular hackathons to identify weaknesses in the programs they develop. So hacking has become good money.

Security Stocks That Should Be on Your Radar

Mobile security companies are still in their startup phase and it is the established players like Cisco, Symantec (NASDAQ:SYMC) , VMware, Microsoft, McAfee, Infineon and Dell that are gradually increasing investment in the area. Security pureplays like Check Point (NASDAQ:CHKP) , Fortinet, F5 Networks (NASDAQ:FFIV) , FireEye and Palo Alto are other stocks to watch. See how the industry did versus the S&P 500 year to date-

Symantec is the only to buy right now since it has a Zacks Rank #2 (Buy) and has been buying up mobile security companies of late. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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