Intel buys McAfee for over $7.7B, What is Intel Thinking?
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Unless there are some undisclosed plans behind this acquisition, Synergy believes this deal will go down as one of the most puzzling acquisitions of any semiconductor, software, or networking company.
The primary reason given for the acquisition is that Intel believes Cyber Security will increasingly become a cornerstone by which all the world connects. This is absolutely true. From smart phones to complex Data Centers, sophisticated security architectures are needed to keep the bad guys away from doing harm. But ascertaining what advantage a combined Intel and McAfee could bring is perplexing. If anything this will potentially play to the advantage of McAfee’s competitors.
Another point to consider is the security market has evolved significantly over the last 10 years. The focus has evolved to being more network-centric as opposed to being endpoint-centric. This market trend has played well for Cisco, Juniper, and Check Point all of whom provide Network Security platforms which guard our most trusted data, be it our personal bank account details or the design plans to build a $10B fighter jet. McAfee while having a strong desktop presence does not have the sophisticated Network Security platforms that are the fortresses that protect so much of our data today in the public and private sector.
According to Synergy’s market share data over the last 6 quarters, McAfee is not a #1, #2, or even a #3 Network Security player. Synergy’s market sizing measures Integrated Security Appliances, security Routers, IDS/IPS, hybrid software, and SSL VPN Gateways not pc-based security software. Although Synergy’s market sizing does not measure the pc-based security software which McAfee is famous for, it is worth asking why would Intel invest $7.7B in cash at the PC level and ignore where most of the strategic security investments are being made today.
If there is a magic way to combine the silicon prowess of Intel with McAfee’s security expertise at the PC-level, it could be a strong move. But connecting the dots between these 2 possibilities leaves open a lot of unanswered questions.
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