Embedded FTW
The general consensus when Intel announced its acquisition of security software giant McAfee was that it's a bit of a head-scratcher. Why the hell would the world's biggest semiconductor company want to shell out eight billion dollars to become a major player in a market it had previously had little involvement with?
The answer lies squarely in the need for Intel to diversify, both in markets and revenue types. Intel's desire to become a major presence in the embedded space is well documented on this site, and the vast majority of its investments in the past couple of years have been with this aim in mind.
A year ago Intel bought Wind River - a leading software company focused on the embedded and mobile markets. Earlier this week it announced the acquisition of Texas Instrument's cable modem business, with set-top boxes and smart TVs in mind, then came the McAfee news.
As regular readers will already be aware, Intel's big adversary in the embedded space is UK chip designer ARM. When we heard the McAfee news we were reminded of our meetings with ARM and NXP at Mobile World Congress. Both companies agreed that for mobile commerce to take off, security is the first thing that has to be properly addressed.
On top of that, it can only be a matter of time before malware writers switch their focus to mobile and other embedded devices. With the consumer electronics devices of the future likely to be Internet-connected, the potential for malware to wreak havoc is greater than ever. Intel will want to be the company synonymous with embedded security.
Other ways in which Intel will hope to capitalise on this deal include adding value to its enterprise-focused software suite - vPro - and from the continued business activity of McAfee itself. The chip business is very exposed to macroeconomic shifts, while the security software business - especially in enterprise, where McAfee is strong - delivers a much more predictable stream of incremental revenue.
"McAfee's strategy of protecting the multitude of devices such as ATMs, printers, digital copiers, and cars fits with helping organizations better manage and protect the IP enabled mobile and embedded devices that run Wind River embedded and mobile software," said McAfee CTO George Kurtz in a blog post after the announcement.
Speaking to CNET Renee James - GM of the software and services group at Intel - said: "There are a number of opportunities where hardware could assist the software, either preventing attacks or recovering from attacks, or hardening the software against certain attacks. McAfee will continue today to sell all of their products in the open market, across platforms. But they may have a line of enhanced security products that take advantages of silicon features."
So both companies are talking a good game, and we imagine Nokia is pleased about it too, considering it's developing the MeeGo mobile OS in partnership with Intel. But many analysts think this is a lot of money to spend on a company that, by itself, will do little to improve Intel's embedded prospects. As a consequence Intel's share price dropped around three percent on the news and has stayed around that level, and Intel clearly still has a fair bit of convincing to do about its embedded ambitions.
