The PKI Market Continues to Penetrate, And the Industry Structure Is Stable and Optimized

With the advent of the Internet, our lives have gradually moved from the real world to the virtual world of the network. More and more electronic activities in the virtual world rely on network activities for storage, dissemination, and interaction, in which the most important problem we face is network security, that is, to ensure that the conduct of electronic activities is point-to-point, safe, and complete. It is the backbone of network security to determine the respective identities of subjects, establish mutual trust relationships and ensure the security support of digital information.

PKI Is The Cornerstone of Network Information Security

PKI is a system that uses public-key technology and digital certificates to ensure system information security and is responsible for verifying the identity of digital certificate holders, whose purpose is to create and manage digital certificates through a set of infrastructure consisting of hardware, software, and participants. The function of PKI is to bind the identity of the certificate holder and related public keys through digital certificates, which provides a convenient way for users to obtain certificates, access certificates, and declare certificates invalid. It provides comprehensive information security support for people to identify in the communication using digital certification and related services.

The DCEP Operation Is Expected to Expand the PKI Market Space

The PKI system is an important part of the construction of the digital currency system. As the digital currency registration center is highly open, it is easy to occur security issues of personal information leakage. Thus, all users must register with the identity authentication, obtain the exclusive private key which binds the user's identity information to generate the digital currency wallet when the digital currency system is established.

The operation of the DCEP is expected to further expand the market space for PKI products. At present, the DCEP is progressing in an orderly manner in some pilots, in which the top-level design, standard formulation, and function research, and joint debugging and testing of legal digital currency have been completed. We believe that the popularization and application of DCEP will bring considerable incremental demand for PKI products in the future.

Cryptographic algorithm is the cornerstone of the construction of the PKI system, as well as the core technology and basic support for network security. China has successively issued some policies to promote the popularization of general-purpose cryptographic algorithms, thereby improving the standardization, the scientific, and the legalization of the cryptographic work.

The penetration rate of PKI in the government, military industry, finance, and central enterprises will increase due to the implementation of the Cryptography Law which has passed a regulation for the first time to stipulate the Instructions and safety management of core passwords, common password and some special measures to strengthen them. The current downstream of the PKI industry are mainly provincial government agencies, the military, and some central enterprises. The implementation of the Cryptography Law will improve the penetration of PKI applications, broadening to county-level government agencies and subordinate departments of central enterprises.

PKI Will Achieve Rapid Landing in the Field of Security and Car Networking

As the Internet of Things market is growing dramatically, the number of connected devices continues to increase. In recent years, as the commercialization of low-power networks such as NB-IoT and Lora continues to develop rapidly, the ever-growing Internet of Things platform has brought a rapid improvement of service support capabilities, in which new technologies such as edge computing and artificial intelligence have continued to be added constantly. According to the relevant statistics, the market scale of the global Internet of Things industry has grown from 50 billion US dollars in 2008 to nearly 151 billion US dollars in 2018. At the same time, the number of networked devices around the world continues to increase. It is estimated that the number of globally connected devices will exceed 50 billion in 2020, far higher than the 34.8 billion in 2017. In the future, with the commercialization of 5G, the number of d networked devices will usher in an explosion, in which the IoT industry ecology will gradually mature and the market scale will further expand.

Technology and Customer Resource Are the Main Barriers in the PKI Industry

PKI products have a high technical level and a short update cycle. The ability to adjust and innovate products according to policies and market demand has become the key to promoting a competitive advantage in the industry. The monopoly accumulation of PKI core technology by top manufacturers and the forward-looking research on network information security are the main technical barriers for new entrants. Besides, PKI products need to provide timely feedback on the individual needs of customers, which requires manufacturers to master a variety of information security technologies and corresponding background knowledge.

Competitors in the Chinese PKI product market include leading companies in PKI infrastructure and security application products, such as Westone, Jilin University Zhengyuan, and Koal Software. There are also a large number of foreign companies, such as IBM and VeriSign. Among them, Westone, Jilin University Zhengyuan, and Koal Software have a broad business market in China, all of which have established stable and cooperative relationships with the government, the military, and the market and have leading R&D technologies, excellent industry experience, and high brand recognition. A pattern of multiple oligarchs headed by Jilin University Zhengyuan and Koal Software has been formed.

Affected by a series of information security incidents at home and abroad, information communication security has received widespread attention. The concentration of China's PKI market is relatively high, and front-end companies have comparative advantages as the PKI industry in China started relatively late, and the barriers to entry into the industry are relatively high. Due to the high loyalty of customers, the market share will not change significantly based on the current level.