News Analysis - Intel's Acquisition of McAfee Signals a Paradigm Shift in the Security Market Place

Intel Corporation and McAfee, Inc. announced a definitive agreement for Intel to purchase McAfee. The purchase price is currently set at USD$7.68 billion where Intel will purchase all of McAfee's common stock for $48 per share. The deal is subject to shareholder and regulatory approvals.

"This acquisition has the capacity to either make Intel's dominance of the processor market even harder to penetrate, or introduce so many vulnerabilities at the hardware layer that hackers have a field day with Intel-based machines," says Derek Silva, Research Analyst, Info-Tech Research Group. "Intel has been bundling security capabilities into their CPUs, like vPro technology, for several years now; it's clear that Intel intends to leverage McAfee's security expertise to continue that trend."

The potential for the inclusion of board-level endpoint protection echoes predictions that Info-Tech made over three years ago with its Adaptive Security thought model, a model designed to make security a fundamental component of the endpoint.

“We foresee a time, within the next three to five years, where McAfee's buffer overflow protection system (BOPS), host intrusion prevention system (HIPS), and heuristics algorithms are built directly into the CPU; one core from a Core i5 or Core i7 processor could even be dedicated to running those services,” said Silva.  “That should make Intel-based computers inherently more secure, but it remains to be seen how well malware programmers adapt to this development."

Though the potential for enhanced endpoint level security is one clear benefit from this acquisition, everything is not all roses however points out James Quin, Lead Research Analyst for Risk Management with Info-Tech Research Group.

“Though McAfee may be primarily recognized as an anti-malware company, and by extension as an endpoint security company,” says Quin, “the truth is that, especially with their state of recent acquisitions, they are much, much more.”

Indeed, acquisitions such as MXLogic (a provider of cloud-based e-mail and web security, e-mail archiving, and e-mail continuity services) and Secure Computing (a provider of network level security solutions) had cemented McAfee’s position as a complete security solutions provider.

“So, what happens in this new model with all the code and hardware that doesn’t fit in the chipset?” asks Quin. “If the goal of this acquisition was to allow for board-level endpoint protection, why acquire a company with so many other product lines? I imagine a lot of current McAfee customers will be holding their breath right about now, wondering just exactly what this acquisition means for the long term viability of the security solutions they have deployed.”

McAfee will continue to be run as a wholly-owned subsidiary, but this will not be Intel's first foray into the software subscription market, and its experience with LANDesk can’t necessarily be regarded as an unmitigated success. Intel will now have the security expertise it needs to highly differentiate its processors from those of competing vendors, but the price seems high if that were the only goal.

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