On Thursday, August 19, the chip giant agreed to pay $48 a share in cash for the anti-virus vendor, a premium of roughly 60 percent. At first one might ask, why pay such a premium for an anti-virus company thats been losing popularity with its core product in the consumer and enterprise? Theyve had restructuring charges and delayed sales; their stock has plummeted in the second quarter; what was Intel thinking?
Intel was thinking brilliantly, for two reasons: Intel has quickly realized that hardware is a zero-sum game, thanks to innovations such as virtualization and cloud computing. Theyve come to realize that their survival will need to rely on software and services as well as hardware. Secondly, this deal is about the future of the Technology industry. With PC sales falling off the charts and more people logging into their smartphone than their desktops, Intel has to ask itself what its future will look like if it cant take control of these new technologies. Thats where the pickup of McAfee comes into play. Their future will rely on integrating the anti-virus, firewall, etc., into the hardware, possibly the CPU itself. This will present significant value for virtualized environments, for example, by enabling the security controls to be latched right into the hypervisor.
Intel is gearing itself up and opening its war chest to address the billions of Internet-ready devices that need embedded security such as ATMs, medical devices and cars, to name a few. Future acquisitions into security to add to McAfees functionality are a very likely possibility.