13 years, 9 months ago

Evolution of the most successful Chip maker? Buy an antivirus company

Link: http://eamitabh.blogspot.com/2010/08/evolution-of-most-successful-chip-maker.html

So where do you go from the position of being the most successful chip maker in the industry? What do you do to evolve your business and revenue model? Well how about buying an antivirus company (sorry! security technology company)? Sounds bizarre? Well join the queue of people who are rubbing their eyes…

Intel has today acquired McAfee for estimated $7.68 billion. Intel states that this acquisition enables a combination of security software and hardware from one company to ultimately better protect consumers, corporations and governments as billions of devices – and the server and cloud networks that manage them – go online. This acquisition augments Intel’s mobile wireless strategy, helping to better assure customer and consumer security concerns as these billions of devices connect.

The initial reaction of industry and analysts is less enthusiastic and that of a confusion as clearly we are not able to make much sense of synergies between the two companies. But George Kurtz, Global CTO of McAfee, explains in a blog post “While you may ask “Why?” – It makes perfect sense to me. Given the current challenges in dealing with the proliferation of virulent malware, bringing software closer to silicon will provide a real advantage for consumers and businesses. Beating back the tide of malware proliferation by changing the game on the bad guys is an exciting proposition.”

However Intel may have a point to prove with it’s previous off-the-beaten track acquisitions not exactly delivering results it promised. For instance it’s much hyped aquitision of Shiva VPN product suite to branch into new product line did not really work out as expected since Intel was operating outside it’s strengths.

It probably is an attempt from Intel to seek new areas of growth and tap into potential of leveraging large software protection deals while selling it’s micro-processing power. Intel Chief Executive Paul Otellini confirmed this aspects of acquisition as he stated that, “The companies also view all areas where Intel sells chips as markets where the software business can grow. Our view is that everywhere we sell a microprocessor, there is an opportunity to sell security software with it,”.

Update to this post on 20 Aug

Some IT managers and analysts today said the planned $7.7bn (£4.9bn) Intel-McAfee deal and HP’s acquisition of Fortify this week are the latest examples of a trend that could threaten long-term innovation in the security industry, reports the CIO magazine.

The article further states that, This week’s moves are the latest in a long line of merger and acquisition activity in the security industry in recent years. The McAfee acquisition marks a completely unexpected entry into the security market by Intel. But the chip giant’s move follows similar ones by other major vendors like IBM, Cisco, EMC, Symantec and HP to pick up security vendors. Read more on