Cloudflare announces new innovation for mobile devices as it steps closer to cybersecurity


Fast growing software company Cloudy (REPORT 0.84%) recently increased its turnover at a steady rate of more than 50%. That hasn’t saved the stock from a steep drop from all-time highs this year (stocks are down almost 60% in 2022 as we head into the fourth quarter). However, the company is committed to investing in the development and marketing of new products in order to maximize its expansion.

Recently, Cloudflare unveiled a number of new services that should help it as it tries to navigate the vast and rapidly growing cybersecurity market. Here’s what you need to know.

The next contender for the cybersecurity crown?

Cloudflare has carved out a place for itself in the tech world with its Content Delivery Network (CDN) located at the edge of the network. These localized data centers close to the Internet end user have helped many developers increase the performance of their web applications. Security has always been part of what a CDN company does, since the requested data arrives at the right place for internet users. But Cloudflare has steadily increased its cybersecurity capabilities, creating a classic “land-and-expand” business model.

Enter what Cloudflare calls the “Zero Trust SIM”. A SIM (subscriber identity module) card is a small, removable chip that stores information about a mobile network subscriber – most often in a smartphone, but also in other devices like tablets and whatever. a wireless carrier can allow you to connect to their network. A SIM card allows the device to operate on the mobile network, which is how a mobile operator identifies the user for billing purposes.

Cloudflare’s Zero Trust SIM card will be an electronic SIM card, not a physical chip. This would allow a company to easily deploy it through a software update. The Zero Trust SIM card would connect a device to Cloudflare’s edge network, extending its Zero Trust security services to mobile devices.

This will make the Zero Trust SIM card a bit different from terminal security services like those offered by CrowdStrike. Cloudflare says these software security guards for endpoints (smartphones, tablets, etc.) are an important part of a company’s security system, but still leave vulnerabilities because not all data and apps leaving a device are encrypted. . The Zero Trust SIM card is intended to fill this gap. Cloudflare also said it will launch the Zero Trust for Mobile Operators program, which will work with mobile network operators to offer the Zero Trust SIM card to subscribers.

How big is this problem?

Cloudflare is quickly hitting $1 billion in annual revenue, but mobile security could help it continue to grow well beyond that goal. Spending on Internet of Things (IoT) devices and services has skyrocketed during the pandemic, and the mobile world isn’t going away anytime soon.

But device-level security still lags behind in many ways. User errors and lax behaviors are among the main causes of successful cyberattacks. Automating security at the device level (so the employee doesn’t have to think about security measures) could go a long way in keeping large enterprise IoT fleets secure. Some estimates indicate that mobile and IoT security will grow at double-digit rates over the next decade and will represent tens of billions of dollars in annual spending.

Cloudflare might be onto something really big here. The company is ambitious and doesn’t shy away from taking on cloud titans like Amazon‘s AWS and the cybersecurity market. But how long can the frenetic pace of expansion last? Co-founder and CEO Matthew Prince said the company will continue to spend its profits, down to zero, until it starts to run out of opportunities.

The market certainly thinks the exploits of the company will continue to pay off for a long time. Even during this bear market, shares are trading at 23 times the value of the company over the past 12 months’ earnings – a high price for a company that is not yet making a profit.

If you’re looking for a disruptive small business with lots of potential, Cloudflare’s recent cybersecurity product announcements are further proof that this is a top-tier stock to consider. If you’re buying stocks, only buy if you can handle the volatility and have at least a few years to let the company realize its vision.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Nicholas Rossolillo holds positions at Amazon, Cloudflare, Inc., and CrowdStrike Holdings, Inc. The Motley Fool holds positions and endorses Amazon, Cloudflare, Inc., and CrowdStrike Holdings, Inc. The Motley Fool has a Disclosure Policy.


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