Software Piracy Hits the Jackpot
With all the debate swirling around intellectual property issues recently, I sat down last week with a local firm that specializes in protecting software from being hacked and pirated. Arxan, of Bethesda, is funded by the National Security Agency to secure all kinds of classified items like military warheads and other weapons.
Of course, there's also a booming demand on the commercial side now that software runs just about everything, from distributing the movies you rent to running the antilock brakes in your car. Just in terms of desktop applications, $40 billion worth of software was pirated in 2006. For every two dollars of software sold, one dollar is pirated, according to Amena Ali, chief marketing officer of Arxan.
The problem, she said, is how easy it's become to hack into software and re-engineer it in order to sell a knock-off product--which happens a lot outside the U.S. Hackers can simply go into the binary layers of software and unlock the mechanism in place to protect it, Ali said. Today, the company released a new product, called GuardIT, that acts like a "moving maze" for software protection. Small chunks of code are injected into the software code. At any given time, those chunks of code are changing the way they work, constantly thwarting hackers' attempts to break into the software.
The security industry is getting lots of attention from local venture capitalists as well, as the demand rises. Art Marks and Hooks Johnston, both parthers with Valhalla Partners, a venture capital firm in Vienna, told me that securing any kind of digital media and software from being pirated is a huge growth area for them.
In fact, just a few months ago, Arxan received its third round of funding worth $13 million.
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