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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.

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