Israel has long been a dominant producer of innovative, effective and proven exportable computer security software and hardware. “Exportable” is a key factor because many other software security powerhouses try to keep the best stuff away from everyone else. For Israel export sales are a matter of life or death and when it comes to high-tech stuff, like security software, business has been growing rapidly of late. For 2014 Israeli security software exports were $3.2 billion and that increased 25 percent to $4 billion in 2015 and is headed for another 25 percent jump in 2016 to $5 billion. The United States and Israel together dominate this market and none else even comes close. In addition to having a lot of the best products Israeli firms have an export advantage because the rate of innovation is so rapid in Israel that what is the “best stuff” there now will be replaced in a few months. This sales edge enables Israel to be a powerhouse in an industry where their main competition, the United States, has 40 times as many people and an economy that is more than fifty times larger.
American electronic warfare, communications and computer security experts long recognized that Israel was a major player in software development. That’s why U.S. worked closely with Israeli Cyber War organizations after 2001 to produce Stuxnet, Duqu, and several other even more powerful and little known Cyber War weapons. These were secret military projects (to deal with the Iranian nuclear threat and lesser maladies) that did not become public until after 2010. At that point a lot more major users of Internet security products became aware of how effective the Israelis were in this area, especially those trying to hack into Israeli networks.
Israeli dominance in Internet security was no accident. When the Internet became commercially available in the mid-1990s and demonstrated its capabilities, and unprecedented popularity, Israelis were out in front of the pack of innovators and entrepreneurs seeking make something of it. This was due to several factors. Some were cultural, some organizational. For example Israeli military and political leaders realized that the Internet would probably quickly develop into another battlefield. So the Israeli military and intel agencies sought to apply the exacting and successful selection methods long used for finding those capable of being elite operatives like commandos and Mossad (foreign espionage) agents to the task of recruiting capable people for new Cyber War organizations. There are now over a dozen of these, nearly all of them secret (as in even their names are classified). These small teams serve various military, intelligence, and other government organizations. It's believed that there are only a few hundred hackers involved and many of them are in these jobs for only a short time (often to take care of their military service obligation). Most of these Cyber War experts go on to careers in the many Israeli software companies and are available to return to the military (as part of their reserve obligation) for short periods to help out with Cyber War threats. This turned out to be a major reason for the Israeli dominance in the Internet software field.
Israel has been trying to get their American counterparts to use some of the Israeli recruiting and talent development techniques. U.S. military officials point out that in the United States most college campuses are hostile to such programs. Not so in Israel, where the constant threat of Palestinian terrorism and Iranian missile attack makes universities more accommodating. The scope of the national threats Israel faces also makes it easier to run a national screening program to identify and recruit potential high performers before they reach high school. In Israel that means these candidates, who are honored by being selected, get additional training and a shot at joining elite Cyber War units.
The Israeli Cyber War experts are constantly tested, which is another big advantage, Foreign (Arab, Chinese, Russian, and so on) attempts to attack Israel via the Internet have been going with increasing intensity since 2001, but rarely with much impact. Whenever there’s another crises in the Arab world that can be blamed on Israel, the non-government Arab hackers who take a swipe at Israel. None of them has managed to do any serious damage yet but the Israelis have noted the trend and taken action. This is bad news for the Arab hackers and black hat (criminal) hackers everywhere.
But this has been good news for Israelis in the Internet and software security business. The Israelis have helped by encouraging the most robust (military grade) Internet security products to also be made available in commercial versions. Naturally the government and military developers of this software were reluctant to share it with commercial firms, even if they these were major corporations and the militaries of allies. But it was done with the Americans and generally proved to be a success with both nations finding they came out ahead. The Israeli government began reducing restrictions on designating a lot of this military grade security software as “dual use” as far as selling it to a small, and very selective, list of countries. For example, Russia and China are apparently not on the approved list but there are enough more trustworthy customers with deep pockets and large budgets to cover those lost sales.
While this policy forces Israeli software developers to constantly come up with new techniques to make their stuff work, this proved to be more of a plus than a minus. That’s because the “government only” policy had these highly perishable techniques and software routines become known to hostile hackers eventually anyway but by selling the stuff to more major users Israeli security experts developed better working relationships with foreign counterparts and that constant collaboration made it easier to develop improved security methods and defenses in general.
No other nation has the combination of characteristics (pro-education, entrepreneur friendly, and surrounded by very threatening enemies) that Israel uses to hit far above their weight in the Cyber War software department.