Why Intel bought McAfee
arstechnica.com
arstechnica.com
A "vPro" application for McAfee might, for instance, be to embed the AV engine in a slim hypervisor layer, invisible to the OS, and to have it report status to a mothership using the AMT engine.
People have been talking about Intel baking McAfee into hardware without realizing that they have better options than that.
Nice. A vendor controller hypervisor with full access to the system and supposedly no way for the user to alter or inspect the code it runs...
What could possibly go wrong.
Intel seems almost fastidious about not imposing this stuff on Linux; from what I can tell, almost all of this stuff is open to Linux kernel developers to take advantage of.
So mostly I think you're just FUD'ing for karma.
The vPro idea is very concrete. It is:
* Crypto-signed control of executable memory and execution environment.
* Hardware-assisted hypervisors that use that crypto security to protect their boot.
* An off-core management processor (like the Sun lights-out-manager) with a secure channel to the hypervisor and a PKI-based system for secure remote communication.
You can think of a lot of cool things to build for an enterprise IT shop with those particular lego blocks.
I buy the point of the article about using McAfee channels for selling, technically, a smaller (less than $ 7B) team can glue hardware with security.
Yes, it does say that the "McAfee purchase gives Intel an instant foothold on countless PCs," but these are not the PCs that Intel is after. These PCs already have Intel chips on them. Intel presumably wants security as a headlining feature for their next generation chips to entice users to upgrade.
In addition, Intel can gain an even wider-reaching foothold into your PC by bundling a driver and distributing it through Windows Updates, as it does already with its integrated video solutions. They presumably wouldn't need to pay Microsoft $7.7 billion for the priviledge of making Windows more secure.
Aside from the foothold in your PC, then, what is left of the "long-term, strategic buy"? There might be some patents and some talented developers, but for a company that already spends $5 billion on R&D every year, it's hard to understand why Intel couldn't come up with an in-house solution.
No, the real reason why Intel bought McAfee is probably much more pedestrian: Intel is simply sitting around with too much cash earning too little return.
(2) Intel has a huge and underutilized repertoire of security infrastructure technology that it can't, as a hardware vendor, fully exploit right now.
(3) McAfee has a huge installed base across the Fortune 1000.
(4) McAfee and Intel were already collaborating on integrating AV with hypervisors and remote management.
From a strategy perspective, this seems pretty straightforward. Intel is vertically integrating. ISVs weren't taking advantage of Intel's existing security investment, probably in part because the industry was structurally resistant to that happening. Rather than waiting and hoping for the stars to align, Intel is taking control of its own destiny.
He finds a strategic acquisition candidate that doesn't upset the regulators (unlike say buying Arm or Nokia)
He spends a bunch of other peoples money on it, he skips to a new job before the whole sorry mess collapses around him.
If we look at MFE's peak earnings from FY2009, it's $173m. So a $7.7b price tag is just under 45x. In other words, it'll take 45 years of FY2009 earnings to merely regain the initial investment. Now let's be more generous and give Intel a low discount rate of 5% and assume that those earnings grow compounded 10% each year. It will still take 25 years for Intel to make back that investment.
Of course, the investment gets better if there are synergies that will provide additional boost to Intel's earnings, but what are they? I don't really buy (2) since Intel has shown that they are capable of getting their software onto your computer when they want to (see their integrated video drivers that download through Windows Update).
But even if they couldn't, they could have just continued collaborating with McAfee without buying them. That's essentially the exact same thing as what's happening now, minus the big transfer of wealth from Intel shareholders to McAfee shareholders.
I suppose that I'm just not convinced that Intel couldn't have rolled their own solution for less than $7bln. Even if they really needed to buy McAfee, a 60% premium over the market price is pretty steep, and it's hard for me to see how that adds more value to Intel shareholders than a 7% special dividend or buyback. So far, I haven't seen an argument that's made me think, "Oh yes, that IS something I'd pay $7 billion for."
McAfee's gross revenues for the last 12 months total over 2 billion dollars; that's many many hundreds of millions of dollars worth of enterprises specifically selecting McAfee software as part of their standard build and as part of the mechanism by which they track and secure their computers.
Is MFE worth the premium? I have no idea. But the "synergy" here is not very fuzzy. Intel has a clear path towards both integrating and bundling MFE's value propositions into their own hardware, and to generating lock-in both based on MFE's brand (which may command north of 40% of the enterprise market) and on a combined AV/hardware security offering that won't be available from any other mainstream vendor.
I don't want to sound like a booster for this acquisition. I'm not. I'm just saying that it's nowhere near as crazy as some people (particularly the "what's Intel going to do, implement AV in ASIC?" crowd) seem to think it is. This is a straightforward vertical integration play, along an axis in the industry (enterprise desktop security) that is natural for Intel to be exploring given their last decade's worth of investment.
Some time later, his assistant: DONE! We just bought you McAfee.
Intel CEO: Cool! What version?
Assistant: Hmm, version?
I wonder how many other projects at Intel got started this way.
Intel CEO: "We need antivirus, can someone buy me McAfee?" Few hours later: "Done." "Great, which version?" "Version ... ?"