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Intel's McAfee acquisition a mobile play

Agam Shah | Aug. 20, 2010
McAfee could be Intel's ticket to success in the mobile market

NEW YORK, 19 AUGUST 2010 - Intel's acquisition of security company McAfee could help the chip maker make a splash in the handheld and embedded markets, in which the company has struggled to establish a presence, according to analysts.

Intel on Thursday announced plans to acquire McAfee for US$7.68 billion, saying this will help the chip maker blend advanced hardware and software security to protect devices from internal and external threats. Hardware and software changes will improve both Intel and McAfee products, and lead to improved security for products ranging from servers to mobile devices, Intel said.

"The bottom line is this will better protect Internet users and their devices," said Intel CEO Paul Otellini, during a conference call to discuss the acquisition.

The "first fruits" of the strategic partnership will be released in the early part of 2011, said Renee James, senior vice president of Intel's Software and Services Group, during the call.

But some analysts were baffled by the acquisition as there was little connection between the companies, and raised questions on how Intel would implement McAfee's software. Intel is primarily a chip maker and does not sell PCs or mobile phones directly to customers, while McAfee is known for its malware products.

However, other analysts thought the acquisition made sense as security enablement is becoming essential. As more devices connect to the Internet, improvements in hardware and software are necessary both on devices and in the cloud for data protection.

Intel dominates the PC and server microprocessor market, but has big aspirations in the handheld and embedded market, and wants to put its chips in devices ranging from smartphones to TVs and set-top boxes. The company's strategy has been to use software to augment those platforms, and the McAfee acquisition could allow it to offer a comprehensive combination of secure hardware and software, which could help it sell more chips, analysts said.

"As [Intel] starts getting into other markets like the digital home, handsets... that's where some of this intellectual property-- whether hardware or software -- comes into play," said Jim McGregor, chief technology strategist at In-Stat.

Intel especially wants to make a mark in the high-volume smartphone space, which is currently dominated by Arm, McGregor said. Implementing some of McAfee's software stack in smartphone hardware could add value in Intel's offerings, giving it an edge over competitors.

"When they control the software, they can optimize the hardware to benefit from it," McGregor said.

Intel's mobile and embedded strategy revolves around the low-power Atom processor, for which the company offers the Linux-based Meego OS.

Intel has to enable protection for Atom-based devices to expand its chip market, said Jack Gold, principal analyst at J. Gold Associates.

 

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