According to MarketsandMarkets (www.marketsandmarkets.com) the total hardware encryption market is expected to reach roughly US$166.67 billion by 2018, growing at an explosive CAGR [compound annual growth rate] of 62.17% for the period of 2013 to 2018.
Encryption of data is a process of converting it into a form, where it becomes unintelligible to any person without access to a key/password to decrypt the data. The two forms of encryption that exist currently are the hardware-based encryption and software based encryption.
The major difference between hardware encryption and software encryption is that in hardware encryption, the encryption and decryption processes are done by a dedicated processor on the hardware encrypted device. In software encryption, the resources of the device on which the software is installed, are used for the encrypting and decrypting the data. This makes hardware encryption much faster, says MarketsandMarkets.
Another advantage of hardware encryption is that the cryptographic key is stored in a separate inaccessible portion of memory storage, thus making it more secure than software encryption, notes the research group. Currently the cost of adding hardware encryption capability to storage products is still slightly high ($ 20-30, on an average).
Also, the flooding in Thailand and the earthquake in Japan in 2011 pushed the prices of all hard disk drives up in 2012. This was mainly because all the top players in the digital storage industry have manufacturing plants in the APAC region, especially in Thailand. Thus a demand-supply imbalance caused a drastic rise in the average selling price of hard disk drives in 2012.
Such external factors have delayed the adoption and wide spread deployment of hardware encrypted products. The hardware encryption market is on the road to recovery and the product prices are starting to come down again and this is driving the market forward.
The global hardware encryption market revenue is expected to reach $14.86 billion by end of 2013. It is also expected to grow to $166.67 billion in 2018 at a CAGR of 62.17%. Similarly, volumes are estimated to grow from roughly 59.76 million units to 691.79 million units in 2018 at a CAGR of 63.20%. This growth is heralded by the consumer electronics applications market for hardware encryption products. The hardware encryption applications in the Military Defense and Aerospace (MDA) applications sector is also expected to grow rapidly in the coming five years.