Why EMC?

Implications: Why EMC? (1) EMC’s RSA Division is the best known encryption firm in the world; and data encryption is the next frontier in preventing data theft. (2) EMC makes data storage and encrypted data requires substantially more storage as encrypted data cannot be compressed.

Analysis: The world is fed up with information theft. The Justice Select Committee of the British Parliament has called for a package of new laws including criminal proceedings in the case of reckless or repeated loss of personal information.  US Judges are not happy about having to hear these “cancer causing” types of cases and some of them have already had their sensitive information compromised.

A paradigm shift is needed and widespread encryption would remove the incentive for hacking; even if hackers succeeded in stealing the data, they could not read it.  To be truly secure the decrypting and viewing of sensitive information ought to be linked to strong authentication. RSA, in addition to being the best known encryption firm in the world also makes SecurID® a well-tested two-factor authentication system.

Traditionally, institutions have been focused on blocking hackers by hardening their communication networks.  For example, they hire white hat hackers as testers and then they use the results to improve upon the strength of their networks.  In addition, they employ tools to scan their networks for weaknesses and to provide an early warning of attack.  Further, they use the things that we use including firewalls and virus scanners; the entire process is referred to as “Defense in Depth.” 

Defense in Depth is nice but we can learn even more from the movie, Groundhog Day where the same day is repeated until the correct choices are made.  It is obviously unwise for an individual to walk down the street when he or she is carrying bags of money.  That behavior is an invitation for a robbery.   Armed guards in armored trucks are used to pick up the funds collected at large retail stores and safely transport them to the bank.   However, placing sensitive information including social security and credit cards numbers on or near the Internet without scrambling (encrypting) is far more irresponsible than walking down the street carrying bags of money.  Sensitive information should have always have been encrypted. 

EMC is in a strong synergistic position: (1) RSA encrypts data (2) EMC makes data storage; and encrypted data requires substantially more storage as encrypted data cannot be compressed. Additional firms that are likely to benefit are Verifone Holdings (PAY) and MagTek Inc, both firms make credit card readers that have built-in encryption.  Cogent Systems COGT, L-1 Identity Solutions (ID) and AuthenTec AUTH may also benefit as they offer biometric authentication.