Last Updated Aug 19, 2010 5:00 PM EDT
Why pay that much for a security company? Intel badly needs something to differentiate it from competitors and to counter the market pressures bearing down on the chip maker. With this move, Intel hopes that it can turn security into a hardware business rather than a software add-on and break away from AMD (AMD), Nvidia (NVDA), Broadcom (BRCM), Qualcom (QKP) -- and even long-time partner Microsoft (MSFT).
Any acquisition by Intel is notable. The company is not a heavy acquirer of others like such tech giants as Google (GOOG), Cisco (CSCO), or even Microsoft. In fact, over its 28 year history, Intel has averaged 2.25 acquisitions a year, and that's with a two year period in which the company went wild and acquired 25 other businesses. Factor out those years and you barely reach 1.5 acquisitions a year. Intel buys a company because it must.
The pressures that face the chip maker are immense. The Federal Trade Commission smacked down Intel over antitrust activity, forcing the company to swear off many business practices that kept it ahead of AMD and Nvidia. A $1.45 billion fine from the EU made it clear that squeezing competitors is unlikely to fly on that side of the Atlantic.
Furthermore, the shift to mobile computing has damaged Intel's competitive position. Its chips aren't the ones powering some of the most popular new devices. Apple has its own, based on a design from ARM Holding (ARMH) and manufactured by Samsung. Many Android phones use Qualcomm CPUs. Even Microsoft appears to be working on its own ARM-based chip. Intel has been desperate enough to port Android to its Atom chip to show itself still a mobile contender. Only, it hasn't been.
And yet, with the acquisition of McAfee, not only does Intel get a line of software other than the tools it makes for developing applications for its chips, but it has a powerful new capability. Security continues to be a growing issue for desktops, laptops, and even smartphones. Eventually that problem is bound to spread to cloud servers.
If Intel puts security into hardware, its platforms would likely run circles around any chip supporting an operating system and antivirus and anti-spam software in addition. The company could effectively offer the following:
- security that doesn't need user attention
- screamingly fast performance compared to systems that use traditional security software
- security available on any and all platforms
- a "don't worry, we'll do it" safety option for consumers
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