The European Aeronautic Defence and Space company aims to enter the potentially lucrative, high-growth market for cyber security services, in a move to grow beyond its core aircraft and aerospace manufacturing business.

In an interview with Financial Times Deutschland, Stefan Zoller, CEO of EADS security subsidiary Cassidian, said the company plans to invest a couple hundred million euros to launch a new cyber security unit.

Cassidian spokeswoman Annette Scheck told Deutsche Welle that the company will use the money to both buy Internet security specialist firms and build up in-house expertise. But she declined to comment on which companies Cassidian would be interested in acquiring.

Not cheap

Whoever these companies may be, they will likely come at a hefty price. Last year chipmaker Intel paid $7.7 billion (5.4 billion euros) to acquire anti-virus specialist McAfee, while Hewlett-Packard forked over $1.5 billion to buy network security specialist Arcsight.

As for focus, Scheck said the new Cassidian unit will provide a "fully encompassing approach to cyber security" for both the public and private sectors.

In Paris, EADS chief executive Louis Gallois said he expects the market for Internet security services to grow explosively in the coming years. "Cyber crime is a problem but problems create new markets," he said ahead of the Paris Air Show, which opened on Monday.

EADS is hardly alone in its quest to tap new markets, however.

Rival Boeing also sees huge opportunities for cyber protection. Using the Paris event to announce the company's ambitions to expand into this area, Chris Raymond, head of strategy and business development in Boeing's Defense Space & Security unit, spoke of a "growth area," fueled by both the defense and civilian sectors' needs for greater protection against hackers.

Both announcements come amid continuing uncertainty about defense spending plans in Washington and European capitals over the next few years - and growing concerns about hacker attacks in both regions.

Cyber arms race

Mikko Hypponen, chief research officer at Internet security company F-Secure, said the world is entering a cyber arms race where increasingly sophisticated viruses and other forms of malware have become the weapons of choice of individuals and groups often impossible to trace. He referred to the EADS decision to expand into cyber protection as a "very interesting development."

Cord Schellenberg, a Hamburg-based independent aeronautical expert, agreed, calling it "a good move."

The group's traditional defense products, he told Deutsche Welle, aren't selling well these days. "Internet security, on the other hand, is a topic governments know they need to devote far more attention to and one that citizens also understand because it affects them."

Boeing's Raymond spoke of threats that companies and individuals will worry about "for evermore," creating long-term opportunities for selling solutions and services.

And, clearly, there is money to be made. In the United States alone, the government aims to counter the growing hacker attacks by increasing its IT security budget from $8.2 billion in 2009 to $12.2 billion in 2014.

Author: John Blau
Editor: Thomas Kohlmann