It’s no longer breaking news Intel are buying McAfee and although the subject has been thoroughly covered in the tech press in recent days, I’ve been giving the subject some thought and find myself a little surprised at the level of consternation — even outrage — expressed by some commentators (or their readers) on the subject.
What is it about this deal that seems to have wound people up? Here are my thoughts.
“Intel McAfee acquisition is biggest, and worst, deal in security history”
Richard Steinnon, Chief Research Analyst at IT-HARVEST LLC, wrote a piece entitled “Intel McAfee acquisition is biggest, and worst, deal in security history”. He looked at the deal from various angles (Technology Acquisition, Brand Enhancement, Investment etc), and couldn’t find a single thing to redeem it, saying “Some deals just don’t make sense”. In this case I don’t agree, but it’s his analysis of the ‘technology acquisition’ angle that interests me.
Surely, technology acquisition is exactly what Intel are doing?
OK, so we’re not necessarily talking about running McAfee’s products ‘as-is’ in silicon, but perhaps we can look forward to some hardware-accelerated desktop/server security products, and we’re definitely talking about acquiring the smarts to secure mobile devices, aren’t we? More on this later.
Overpriced?
Another criticism leveled at this deal is that Intel are paying too much for McAfee, but my guess is that value is in the eye of the beholder, and that to all intents and purposes, McAfee is worth exactly $7.68 billion if you’re Intel.
Moreover, Intel and McAfee already have a trusted, strategic partnership in place, and they think the businesses are a good fit. This is why Intel haven’t acquired one (or more) of McAfee’s competitors; there are dozens to choose from.
Even if the business was not worth the price Intel are paid, the deal has effectively split the commentators into two camps: those that think Intel know what they’re doing, and those that don’t.

Intel Software Acquisitions. Source: arstechnica.com
The 3rd Pillar
Intel have a pretty clear strategy with regards to software acquisition and are betting a few things are going to happen:
First, mobile devices (not just handsets) are going to be the growth market in the next 10 years. Intel’s Atom range competes with ARM and PPC in this space and they want to put their products in as strong a position as possible. Intel reckon there will be 15 billion mobile Internet-connected devices worldwide by 2015. Ericsson CEO Hans Vestburg thinks this is conservative and is betting on 50 billion by 2050.
Second, threats — that according to some “have yet to materialise” — will provide a new market for security vendors. In this context, Intel believe security will form the 3rd pillar of computing, alongside energy-efficiency and connectivity.
Third, it is better to offer an integrated bundle of silicon (Atom), OS (Wind River) and security (McAfee) to market than just sell processors and chip-sets.
Is this a good thing?
I think so. Recent history has shown that if it’s possible and profitable for certain types of people (e.g. criminals) to take advantage of security vulnerabilities to make a profit or a point, they will do it.
If the prediction of the ubiquitous 50 billion connected devices is anywhere near correct, then this is going to be a huge market for criminals (and idiots) where consumers and business will need to be protected. This is also probably the reason that Intel’s Software and Services Group would be a global top-ten software company if it were an independent entity.
Couple this with the changes in Internet usage as a result of iPad, iPhone and Android devices, and it’s a potentially explosive situation.
What will it mean to Intel’s competition?
That depends on who you ask and which competition you’re talking about. AMD might be reasonably sanguine and may even see it as an opportunity to chip away (pun intended) at Intel’s share of the laptop/desktop/server CPU market if Intel’s focus is elsewhere.
In the long run, though, mobile/embedded device security is Intel’s main motivation for this deal, and clearly believes it will be a key differentiator between themselves and the likes of ARM in the energy-efficient processor market. And, that the answer lies — at least in part — with McAfee.
Over the next few years as the embedded-thing-connected-to-the-internet-market explodes, I think we’ll see Intel and McAfee vindicated.