Analysis Roundup: Intel's McAfee Acquisition

By CIOinsight  |  Posted 08-19-2010 Print Email
In announcing Intel's plans to acquire security vendor McAfee for $7.6 billion on August 19, executives at both companies touted how the integration could allow them to integrate security more deeply into Intel's portfolio. Analyst views are mixed on whether the deal is a good fit.

In announcing Intel's plans to acquire security vendor McAfee for $7.6 billion on August 19, executives at both companies touted how the integration could allow them to integrate security more deeply into Intel's portfolio. However, analysts question whether the deal is a good fit.

"If Intel wants to grow the franchise for protecting PC platforms, the McAfee deal is a great acquisition,"  Forrester Research analyst Andrew Jaquith tells CIO Insight sister publication eWeek. "But if you view today's security aftermarket as something that ought to be better left in the ashbin of history, where security is baked into operating systems, this deal is more of a head-scratcher. In that light, Intel's purchase of McAfee is a lot like a horseless-carriage vendor buying a leading supplier of buggy-whips."

Steve Coplan, an analyst with The 451 Group, says Intel's software division has long been an "orphan child" to the hardware division, despite the division generating significant revenues. Gartner analyst Neil MacDonald notes that Intel needs to figure out how to build an established sales force to sell to enterprises.

Assuming the deal gets the necessary regulatory approvals and closes, McAfee will be operated as a wholly owned subsidiary and will report to Intel's Software and Services Group.

Chip-Level Security

In a news analysis for eWeek, Eric Lundquist takes a different spin, noting that the acquisition positions Intel to provide chip-level security, something that will be increasingly important as malware and other threats proliferate. "Intel has the money and is keenly aware that it needs to move more and more of the fundamentals of computing into the hardware," says Lundquist. "The current distinction, where Intel -- or Advanced Micro Devices, or any of the other chip makers -- provide a platform while the software builders do all the interesting and vital functions, is not a winning brand strategy."

While there's a lot to learn before we see how this acquisition shakes out, the rationale doesn't seem that strange, writes eWeek's Don Sears. "It's a strong sign that Intel has decided to take security to another level throughout its product line. In addition, it also shows that Intel is quietly preparing to take on Cisco as well as other networking and communications vendors by offering something unique and important. What we could be seeing is a move by Intel to make sure that the broad market for smart devices doesn't also become the next security battleground."

Super-Smart Devices?

One clue to Intel's direction is the company's recent purchase of Texas Instruments' cable modem business, says Sears. When it did this, Intel also took on Cisco, which purchased Scientific Atlanta, another big provider of cable interface technology, a few years ago. For the most part, Cisco's acquisition has proven to be mostly invisible -- Scientific Atlanta cable modems remain much the same as they were five years ago.

Now, Intel is throwing a new factor into the mix. Imagine, a cable modem that includes embedded security features such as a firewall, intrusion prevention and malware detection. McAfee already has the software technology to provide this capability, and it has the engineering chops.

By doing this, Intel can give itself a significant competitive advantage. Cable companies are, after all, usually ISPs in addition to being entertainment providers. To them, malware is at the very least, a significant cause of overhead because of increased traffic and a greater number of support calls. It's also a potential liability issue for them as users, especially small businesses, get attacked through their cable modems. Having real and capable embedded security is a benefit to everyone.



 

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