The Internet subsector reported strong year-over-year growth of 13.1% in Q3 2015. However, on a quarter-over-quarter basis, the sector declined by 2.5%. The four top companies with year-over-year growth were Yelp (+40%), LinkedIn (+37%), Netflix (+23%) and Amazon (+23%). Quarter-over-quarter growth leaders were similar: LinkedIn (+10%), Amazon (+9%) and Yelp (+7%). eBay was the only company that experienced both year-over-year (-52%) and quarter-over-quarter declines (-52%) due to the PayPal spin-off and sale of its ‘Enterprise’ business segment.
The third quarter of the year continued to see high profile security issues in the Internet sector. In July 2015, eBay fixed a security flaw that was being used to steal payment data from ecommerce sites that use Magento, an e-commerce platform then owned by eBay.1, 2 The company also faced a phishing scam in September 2015 where eBay usernames and passwords were being stolen through a spoof login form which was hosted on the genuine eBay domain ebaydesc.com.3 In August 2015, PayPal fixed a security flaw that could have facilitated the theft of unencrypted credit card details.4
Google fixed several security flaws in Chrome and Android that could have enabled hackers to remotely manipulate, control or damage devices.5, 6 The company also replaced Google Wallet with Android Pay which brings more security features than its predecessor.7
Interest in security technologies is increasingly driven by the high-impact nature of advanced targeted attacks, as well as elements of digital business, particularly cloud, mobile computing and IoT. This focus is driving investment in emerging offerings, such as endpoint detection and remediation tools, threat intelligence and cloud security tools, such as encryption.8 Google recently announced the launch of OnHub, a smart router for home that runs on the Google Brillo IoT operating system and supports Wi-Fi, BluetoothSmart, Thread and Zigbee.9 While traditional routers face security issues due to lack of firmware updates for older products, Google will issue regular, automatic updates for OnHub. In fact, the device will not run unless it has been updated with the latest and most secure version of Brillo.10 OnHub can also create a secure cross-platform communication layer that makes it compatible with both Brillo-based devices and other devices running on legacy or competing platforms.9
Worldwide spending on information security will reach US$75.4 billion in 2015, an increase of 5% over 2014. Security testing, IT outsourcing, and identity and access management present the biggest growth opportunities for technology providers.8
By 2017, over 20% of enterprises are expected to have digital security services devoted to protecting business initiatives using devices and services in IoT. In the IoT world, information is used to change the physical state of environments through devices that are not general-purpose computers but, instead, devices and services that are designed for specific purposes. As such, the IoT is at a conspicuous inflection point for IT security.8
On the July 17, 2015, eBay completed the distribution of the outstanding common stock of PayPal Holdings, Inc to its stockholders. Immediately following the distribution, PayPal became an independent, publicly traded company and is now listed on NASDAQ under the ticker symbol ‘PYPL’. eBay continues to trade on NASDAQ under the ticker symbol ‘EBAY’. The spin-off of PayPal into an independent company is intended to allow eBay and PayPal to capitalize on their respective growth opportunities in the global commerce and payments landscape, and to create sustainable shareholder value.
eBay also signed an agreement with a consortium of buyers led by Sterling Partners and Permira Funds to sell its ‘Enterprise’ business segment. Enterprise includes the company’s ‘Magento’ business and provides commerce technologies, omnichannel operations and marketing solutions for general merchandise merchants. The exclusion of PayPal and Enterprise segment earnings reduced earnings (US$0.43/diluted share) and revenue (US$2.1 billion) over the prior year and quarter, but exceeded analysts’ expectations.
Amazon announced that it is acquiring Elemental Technologies for US$500 million, one of Amazon’s biggest acquisitions to date.11 Elemental Technologies is a pioneer in software-defined video solutions for multiscreen content delivery. The acquisition brings together Elemental’s leading video solutions with the Amazon Web Services (AWS) Cloud platform to provide media and entertainment companies with a range of integrated solutions to efficiently and economically scale video infrastructures as the media industry increasingly moves to Internet-based delivery.12 The deal is expected to close in the fourth quarter of 2015.12
1. Trend Micro, Jul 2015
2. Simple Helix, Jul 2015
3. Netcraft, Sep 2015
4. TechWorm, Aug 2015
5. US-CERT, Sept 2015
6. The Register, Aug 2015
7. Droidlife, Sept 2015
8. Gartner.com, Sept 2015
9. Digital Transformation, Aug 2015
10. ZDNet, Aug 2015
11. TechCrunch, Sept 2015
12. Elemental Technologies, Sept 2015