Intel made a surprise decision Thursday to acquire McAfee, long recognized as one of the world’s major providers of security software and services, in a deal worth US$7.7 billion.
Based in Santa Clara but active in the Canadian market for more than 15 years with a Canadian office in Markham, Ont., McAfee is best known for its AntiVirus, McAfee Internet Security, and McAfee Firewall. Its enterprise offerings include ePolicy Orchestrator, among others. The company employs more than 6,000 people around the world. McAfee Canada is led by general manager Ross Allen.
Intel said in a statement that McAfee will become a wholly-owned subsidiary of Intel, reporting to Renée James, Intel senior vice-president, and general manager of its Software and Services Group.
“Hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow,” said James. “This acquisition is consistent with our software and services strategy to deliver an outstanding computing experience in fast-growing business areas, especially around the move to wireless mobility.”
The Intel statement suggested the chipmaker sees a growing need for enhanced security due to the proliferation of devices connected to the Internet, and noted that McAfee has enjoyed double-digit, year-over-year growth and nearly 80 per cent gross margins last year.
Although Intel embedded security functionality in chips years ago with TPM, IDC Canada analyst David Senf said there is little doubt the company will benefit from McAfee’s products.
“The more computing is secure right out of the box the more boxes of whatever type get sold – and the more chips Intel sells,” he said, adding the acquisition will open up more opportunities for new revenue. “It diversifies its revenue mix and adds more possibilities to each sale. Moreover, the maintenance stream from security software will help smooth out the seasonality of Intel’s business.
McAfee has been trying for some time to branch out from its core business of anti-virus and firewall into enterprise wireless device management. In May it bought Trust Digital, a firm that specializes in managing smart phones such as the Apple iPhone and wireless devices running the Google Android operating system. However the company has also experienced some hiccups this year, in particular a flawed update to its VirusScan to users which caused crippling problems with some companies using Microsoft Corp.’s Windows XP. McAfee offered a free year of security review services to compensate those customers affected by the incident.
McAfee has also been trying to rally third party vendors around its ePolicy Orchestrator product by forming the Security Innovation Alliance, which includes Vancouver’s Absolute Software as a member. Among the company’s major product updates this year was its McAfee Data Loss Protection 9.0, which also integrates with ePolicy Orchestrator.