Arms vendors eye cybersecurity as sales drop

Posted: February 20, 2013

STOCKHOLM - The world's largest arms vendors are expanding in the cybersecurity sector as austerity measures weigh on sales of traditional weapons, a Swedish peace research institute said Monday.

Sales by the 100 largest arms-producing companies, excluding Chinese companies, fell by 5 percent to $410 billion in 2011, the Stockholm International Peace Research Institute said in its annual review of the industry.

The drop was mainly due to austerity measures and withdrawal of troops from Iraq and Afghanistan, the institute said, but it pointed out that cybersecurity has remained a privileged spending area for governments despite budget cuts.

Institute cybersecurity expert Vincent Boulanin noted, "Countries are willing to gear up to face potential cyberthreats from other countries or private actors."

Cybersecurity first became a major issue after the attack against Estonia in 2007 that used thousands of infected computers to cripple dozens of government and corporate websites, Boulanin said. Since then, numerous attacks, including the recent Chinese hacker attacks against the New York Times and the Wall Street Journal, have increased demand for security products.

Boulanin said arms dealers are taking advantage of those developments to expand into new fields and are acquiring smaller companies to get hold of the necessary technical expertise. Ventures mainly involve services for data and network protection, testing and simulation, training and consulting, and operational support.

The institute also said U.S.-based Lockheed Martin remained the biggest arms vendor in 2011, with arms sales of $36.27 billion, while Boeing overtook Britain's BAE Systems as the second largest weapons merchant.

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