Conceptually, the idea of building security into the chip is not new. However, the real question is: Does this particular deal make sense?
I have to say this deal makes no sense to me unless Intel keeps its hands off managing McAfee. McAfee is not in Intel’s core business. Like many acquisitions that go wrong; the idea sounds nice but the reality and execution are something entirely different. Worse case for Intel is that McAfee generates cash flow for Intel.
I do not want to comment on the product performance of network security and anti-viral companies like McAfee, Symantec, Peter Norton, AVG Technologies, or Kaspersky Labs. Users of these products are consumers of these products for their own reasons. The fact is people change security software programs frequently. Large corporations change security software platforms less frequently than small business and individual users.
What we need to focus on is the reason for such an acquisition. McAfee has been losing market share over the years to companies like AVG Technologies and Kaspersky Labs – and for good reason. The question is who benefits from the Intel acquisition more; Intel or McAfee?
As I stated, the idea of building security into the chipset is not new. Marrying software to a device is not new – think Windows Operating System and every PC on Earth. What does McAfee bring to the table? Does it bring revenue? Does it bring a customer list? The idea is not new and it is not a bad idea; of course if McAfee cannot keep up with the likes of Kaspersky or AVG then Intel just made one big mistake.
Here is a question to consider: Did Intel overpay for McAfee?
The acquisition is clearly a strategic acquisition and therefore the acquisition multiple has minimal connection with McAfee’s financials. Intel needs to reach into new markets; especially the mobile market.
Intel does not dominate the wireless chip industry. Then again, McAfee is not a player in wireless devices either. McAfee was the cause of millions of computers crashing in mid-2010 when a McAfee definition file update removed a Windows system file causing all of those computers to lose network access. I would say that was a big OOPS. With growing competition, McAfee needed to be acquired.
Intel needs a wireless strategy; frankly, I do not think McAfee is the answer to their wishes.