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phoenixdave
@unknown multiplier, I couldn't agree with you more. With the large variety of ...
mark.lapedus
Intel is a hardware-based processor company. They are good at that. And they are ...
McAfee deal brings Intel into mobile security
Mark Lapedus
8/19/2010 9:36 PM EDT
SAN JOSE, Calif. - Intel Corp.'s proposed $7.68 billion acquisition of security software vendor McAfee Inc. expands its ongoing push in the embedded front, especially in the mobile space.
But questions remain about the surprising deal. Intel (Santa Clara, Calif.) said Thursday it entered into a definitive agreement to acquire McAfee for $48 per share in cash, a 60 percent premium over McAfee's closing price of $29.93 Wednesday. Both companies' board of directors unanimously approved the deal, Intel said.
There are parallels between the proposed McAfee deal and Intel's 2009 acquisition of real-time embedded software vendor Wind River Systems Inc.
However, security software is a different technology. ''In a market still dominated by desktops and laptops, the business model for embedding (security) software at the processor level is still immature. The prevalent model is to load software on a finished product, a model that does not give much advantage to a Intel/McAfee combination,'' said Allan Krans, an analyst with Technology Business Research Inc., in a report.
''However, with the rise of tablets and mobile phone-based computing will bring with it increased demand for software intelligence that is embedded at the hardware level. All security vendors have recognized and responded in some way to the mobile computing security threat, but offerings are not currently prevalent in the market,'' Krans said.
''With more sensitive and even confidential computing tasks being performed on mobile devices, demand for security will not lag far behind. Intel’s acquisition of McAfee may not have a profound impact in the PC market, but could allow both Intel and McAfee to benefit significantly from rising demand for embedded mobile security that has a minimal impact on device performance,'' he said.
McAfee is somewhat different than its rivals. ''While dwarfed by market leader Symantec, McAfee enjoyed the differentiation provided by being the largest pureplay security vendor,'' he said. ''After riding its pureplay status and frequent acquisitions to close the gap in security, McAfee now joins Symantec in providing security as part of a much broader product set. During 2Q 10 McAfee ended a growth streak that included seventeen consecutive quarters of double-digit revenue growth largely fueled by acquisitions.''
But questions remain about the surprising deal. Intel (Santa Clara, Calif.) said Thursday it entered into a definitive agreement to acquire McAfee for $48 per share in cash, a 60 percent premium over McAfee's closing price of $29.93 Wednesday. Both companies' board of directors unanimously approved the deal, Intel said.
There are parallels between the proposed McAfee deal and Intel's 2009 acquisition of real-time embedded software vendor Wind River Systems Inc.
However, security software is a different technology. ''In a market still dominated by desktops and laptops, the business model for embedding (security) software at the processor level is still immature. The prevalent model is to load software on a finished product, a model that does not give much advantage to a Intel/McAfee combination,'' said Allan Krans, an analyst with Technology Business Research Inc., in a report.
''However, with the rise of tablets and mobile phone-based computing will bring with it increased demand for software intelligence that is embedded at the hardware level. All security vendors have recognized and responded in some way to the mobile computing security threat, but offerings are not currently prevalent in the market,'' Krans said.
''With more sensitive and even confidential computing tasks being performed on mobile devices, demand for security will not lag far behind. Intel’s acquisition of McAfee may not have a profound impact in the PC market, but could allow both Intel and McAfee to benefit significantly from rising demand for embedded mobile security that has a minimal impact on device performance,'' he said.
McAfee is somewhat different than its rivals. ''While dwarfed by market leader Symantec, McAfee enjoyed the differentiation provided by being the largest pureplay security vendor,'' he said. ''After riding its pureplay status and frequent acquisitions to close the gap in security, McAfee now joins Symantec in providing security as part of a much broader product set. During 2Q 10 McAfee ended a growth streak that included seventeen consecutive quarters of double-digit revenue growth largely fueled by acquisitions.''
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mark.lapedus
8/19/2010 11:11 PM EDT
Does Intel really have a strategy or not? It doesn't seem so. They are in one market. Then they exit. And so on.
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Dave.Dykstra
8/20/2010 2:51 AM EDT
Interesting. Considering the large number of devices using embedded software today and the anticipated far greater number (and percentage) in the near future, this could make a very interesting mix for them. It would appear to be a good move in order to help retain an already large market share in hardware that is becoming much more demanding for intelligent and secure embedded applications.
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spingal
8/20/2010 5:45 AM EDT
Intel have a very low hit/miss ratio on hardware acquistion integration, they've really not been that successful. Can S/W and/or Services be a more successful model ?
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mark.lapedus
8/20/2010 11:04 AM EDT
Over the years, Intel has tried but failed in these markets: ASICs, fault tolerant computers, supercomputers, comm ICs, wrist watches, motherboards, Intel-branded PCs, etc.
Why will Intel win in embedded software?
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docdivakar
8/20/2010 5:22 PM EDT
Mark, I have to disagree with you here. While I am not going to say this is a brilliant strategy by Intel at this time, it does represent a smart move.
Consider for a moment the fact that wired internet connections will be outnumbered by handhelds within the next couple of years, M2M nodes, smart phone and appliances, data security and services will figure very high on the list. At the keynote of Hot Interconnects (IEEE HOTI), it was mentioned that availability of real time data and services (for the likes of iPads, Kindles, video on demand, etc.) will far outpace the email traffic as early as Q4 2011. Given these trends, I think Intel's strategy is in the right place.
What I would like to see next is information on what hardware solutions (for the mobile, handheld, smart devices, M2M nodes) will complement the software acquisition Intel just made... I hope that is forthcoming in the near future.
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dblaza1
8/20/2010 8:13 PM EDT
When I first heard about Intel/McAfee I was baffled but after giving it some thought and rereading the story on Intel's purchase of Wind River http://bit.ly/bbf25U I think I see a pattern. Intel knows that in order to grow the business they must embrace software, the margins and market are huge and Moore's law is running out of steam. This isn't going to be easy though, Microsoft isn't going to capitulate.
This is going to be fun to watch
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Tech Supply SAC
8/21/2010 12:19 AM EDT
Yesterday I read the opinion that Intel could be in the same way that IBM initiated some years ago. And I would add, will not be that Intel sees the takeoff of the ARM brains and others in the smartphones sand, against who does not wish to compete? If so it would be lamentable, because all competition is advantageous for the end users.
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unknown multiplier
8/21/2010 1:00 AM EDT
As mentioned elsewhere, embedding software in hardware is only a one-time fix. In the lifetime of the hardware product, lots of new security risks will come up. You can only use software to deal with this, but instead of cluttering everybody's tablet or smartphone, more burden should be put at the cloud level (servers) to clean/screen documents which can be downloaded.
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mark.lapedus
8/21/2010 10:44 AM EDT
Intel is a hardware-based processor company. They are good at that. And they are excellent at manufacturing. And that's it. Intel has found a way to mess up in other markets. I say they don't understand software, including real time or security. Wall Street thinks the McAfee was a dumb move. I say it wasn't dumb. I just believe Intel can't manage an acquisition, based on past deals and a checkered track record.
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phoenixdave
8/21/2010 8:52 PM EDT
@unknown multiplier, I couldn't agree with you more. With the large variety of components that will be accessing the internet, it makes more sense to handle the security issues at the server level. This would also help to prevent the spread of viruses through "unsecure" individual computers, smart phones, etc.
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