$Microsoft (MSFT.US)$The "Blue Screen of Death" caused a global crash, affecting almost 8.5 million devices and causing many companies to shut down and flights to be cancelled.

This cyberpunk scene occurred last Friday and became one of the largest-scale crash events in IT history. The "culprit" behind it was quickly found to be the American cybersecurity giant,$CrowdStrike (CRWD.US)$which pushed an incorrect content update to Microsoft users worldwide.

The widespread power outage ultimately happened because Microsoft dominates the global desktop operating system market. In the global terminal protection software market, CrowdStrike is also second only to Microsoft.

This IT disaster has raised a warning to the development of human technology security: the operating system is the 'foundation' of the entire IT industry, like water and electricity, is a crucial existence, and over-reliance on any company is dangerous.

Breaking the global technology dependence on a few companies is not an easy task. This storm has given impetus to the diversification and self-control of operating systems and network security companies, making more companies and countries realize how essential this is.

This reflection has sparked a flame, providing more operating system and network security companies with an opportunity to flourish.

Microsoft and CrowdStrike's many competitors have already benefited from this in stock prices. In the A-share market, on July 22, stocks related to cybersecurity and the internet plus-related concept soared, with$Nations Technologies Inc. (300077.SZ)$,$Surfilter Network Technology (300311.SZ)$,$Shenzhen GuoHua Network Security Technology (000004.SZ)$,$Jilin University Zhengyuan Information Technologies (003029.SZ)$,$Koal Software (603232.SH)$rose to the daily limit or more than 10%. Many concept stocks such as Huawei Euler, Huawei Ascend, and Hongmeng also experienced a big rise.

Crisis.

Before this historic IT failure occurred, most ordinary people were probably unfamiliar with the American company named CrowdStrike.

In fact, this company is a genuine leader in American cybersecurity and occupies a large share of the cybersecurity market. However, its main service objects are enterprise users, and it is not widely used on personal computers, leading to its low popularity.

CrowdStrike has over 0.02 million customers worldwide, including Microsoft and other technology giants. According to statistics from market research company IDC, in the $12.6 billion global endpoint protection software market, CrowdStrike occupies about 18% of the market share, second only to Microsoft's 25.8% market share.$Amazon (AMZN.US)$Due to the serious impact on the company, CEO Musk stated that CrowdStrike has been removed from all systems.

According to CrowdStrike's explanation, on July 19th, CrowdStrike released a sensor configuration update to the Windows system, triggering a logical error that caused affected systems to crash or blue screen.

For CrowdStrike, this should have been an ordinary software update, which regular updates should silently update automatically in the background without affecting user usage. However, since this update had a loophole, it directly caused system crashes during operation, which eventually led to the global 'Great Crash'.

Some professionals in the IT industry believe that, as a security company, CrowdStrike's product should enhance system stability and security, rather than undermine it. This incident is likely to shake the confidence of some users and potential customers.

In addition, risk, strategy, and human capital consulting firm Marsh & McLennan expects that over 75 clients may file network failure claims due to the global collapse of CrowdStrike.$Tesla (TSLA.US)$In May of this year, the results of a new round of national surveys were officially released, showing an increase in server operating system products compared to the first round. Internet giants such as Huawei Cloud, Aliyun, Tencent Cloud, and

Marsh & McLennan, a consulting company specializing in risk, strategy, and human capital, forecasts that more than 75 clients may file network failure claims due to the global collapse of CrowdStrike.$Marsh & McLennan (MMC.US)$Marsh & McLennan, a consulting company specializing in risk, strategy, and human capital, forecasts that more than 75 clients may file network failure claims due to the global collapse of CrowdStrike.

Patrick Anderson, CEO of the American research organization Anderson Economic Group, estimates that the economic losses caused by this event may exceed 1 billion US dollars.

CrowdStrike will surely be impacted. Due to its previous good performance growth, CrowdStrike's market value had more than doubled in the past year. However, affected by this incident, its opening price plummeted 15%, finally closed down 11.1%, creating the largest single-day decline since 2022, and a total market value evaporation of about 9 billion US dollars to 74.215 billion US dollars.

As the party involved, Microsoft was also affected, with its stock price falling nearly 2% at one point and finally closing down 0.74%. In fact, this is not the first time that Microsoft has had a large-scale crash. In January of this year, Microsoft's cloud had a global crash, affecting a series of services from Outlook to Teams; by May, Bing and Copilot services suffered a massive shutdown that lasted 24 hours.

Raymond, Tencent Security's Director of IOA Product Operation, told Wall Street News that the "blue screen" incident of Microsoft highlighted the vulnerability risk of the global IT system, including the vulnerability of large institutions' high dependence on a single supplier, the vulnerability of Windows system itself, and the vulnerability of the cybersecurity product architecture.

Raymond pointed out that although the blue screen was mainly caused by the update of the CrowdStrike software kernel driver, as the developer of the Windows operating system, Microsoft can provide a more robust protection mechanism for the Windows system. For example, in the scenario where the blue screen appears repeatedly, it can automatically shield the root module that triggers the blue screen, ensuring that the system can run normally and reduce the impact of the failure.

The occurrence of Microsoft's "blue screen" is a warning. Security is an important issue of life and death in the digital age. The vulnerability problem of the IT system will inevitably be taken seriously and will bring about obvious changes in related industries.

Pattern

When a fatal error occurs, people tend to reflect on it habitually. This incident undoubtedly exacerbated everyone's concerns about the high concentration risk of operating systems and the cybersecurity industry.

Raymond, Tencent Security's Director of IOA Product Operation, told Wall Street News that the impact of Microsoft's blue screen incident was extremely widespread and could be an opportunity to accelerate the transformation of the operating system and the cybersecurity industry.

In the cybersecurity industry, only 15 companies in the world account for more than half of the market share of cybersecurity products and services. In the field of modern endpoint security, which is to protect personal computers, notebooks, and other devices, oligopoly is even more serious, and three companies control half of the market. Among them, Microsoft and CrowdStrike are the two largest companies.

In the most familiar desktop operating system to the public, Microsoft Windows operating system has been dominating for many years. According to StatCounter data, in 2023, Windows accounted for more than 70% of the global desktop market, and other operating systems including macOS and Linux had a market share of no more than 10% per company.

The concentrated pattern has undoubtedly had a negative impact on cybersecurity and benign competition, and the diversification and controllability of operating systems and cybersecurity companies have long been urgent.

In Raymond's view, the global operating system software market will present a diversified development pattern. In the traditional terminal market, some companies will increase the proportion of MAC systems; at the same time, open-source operating systems such as Linux will become an important force in the market.

In recent years, China has been vigorously promoting the development of information technology and creation, with security of operating systems and domestic substitution as one of the key tasks.

China's newest national survey results were officially released in May of this year. Compared to the first survey, there was an increase in server operating system products. Internet giants such as Huawei Cloud, Aliyun, Tencent Cloud, and $Hunan Kylinsec Technology (688152.SH)$Entrants such as Thinking are involved; the kernel versions of desktop operating systems have been upgraded, including three types of desktop operating systems: Kirin, Tuxin, and Fangde.

The localization of desktop and server-side OS in China has achieved certain results. This year, Huawei also announced the launch of "Pure Hongmeng" on mobile devices. Hongmeng OS on IoT and desktop is expected to accelerate.

In addition to the diversified development of operating systems, Raymond also believes that this incident will also accelerate the enterprise's move to the cloud. Cloud vendors usually provide self-developed cybersecurity software that is more compatible with cloud services, balances performance and efficiency, and has a more complete safeguard mechanism and responsibility allocation.

According to IDC predictions, by 2025, the number of IoT devices connected globally will reach 51.9 billion, and China will have 8.5 billion. The proportion of enterprise telecommuting may exceed 97%, and 88% of enterprises may cooperate with more than two cloud service providers at the same time.

Shen Meng, Managing Director of Hong Song Capital, also believes that this incident shows that even top system service providers may cause major information system security failures due to negligence, so there is still a lot of room for development in related industries.

The cybersecurity industry has always been surrounded by wolves. On July 14th, it was rumored that Alphabet, Google's parent company, was negotiating a $23 billion acquisition of Israeli startup Wiz. This will be the largest cybersecurity company acquisition in history and the largest acquisition in Alphabet's history.

In addition, analysts at Debon Securities pointed out that under the frequent cloud security incidents in the world and the promotion of China's information creation policy, a group of network security companies with core competitive products are expected to emerge.

Raymond stated that after this incident, the stability of security products itself (continuous stable working time, system resource occupancy, whether it affects other software) and system coverage (deeply supporting Windows, Mac, Linux, information creation and other operating systems, and server versions) will become important parameters when enterprises select products.

"It is expected that purchasing companies will require cybersecurity vendors to provide product architecture frameworks to explain the principles of stability and compatibility in the procurement process. For example, in Tencent IOA, the product mechanism has placed the implementation logic at the system application layer as much as possible, avoiding the system risk caused by complex logic and frequent updates at the kernel layer." Raymond revealed.

Under the catalyst of AI, digitalization is accelerating globally. In the age of interconnectivity, cybersecurity must always be prioritized, as any small mistake can be infinitely magnified and cause irreparable losses.

The Microsoft Blue Screen incident has thrown a bomb into the industry that has always been monopolized by a few giants. A new pattern is brewing in the dark. "Microsoft Blue Screen".

Editor/Lambor