For 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 cyberspace.
The 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.
The 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.
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.
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.
Defense 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 against hackers.
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 initiatives.
“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.”