Last week we saw one of the largest acquisitions in the history of computer security as Intel agreed to buy McAfee for $7.7 billion dollars. Clareity Security sells and supports McAfee SECURE™ (formerly HACKERSAFE™), a daily security monitoring service for web sites. Intel must have wanted McAfee badly because they paid a 60% premium over the stock price, which left a few analysts scratching their heads and calling it an expensive acquisition.
Why did Intel do it? Hans Mosesmann, an analyst at Raymond James Associates said: “Security is becoming a really big deal. The security threats that are out there are not going away — you could argue that they are going to get worse — and having a tightly coupled hardware and software is a strategic advantage.” In other words, Intel plans to build more security, malware and anti-virus features right on the PC chip. Intel’s chips also appear in other devices that connect to the internet such as DVD players, set top boxes, TVs, and even cars, and these devices need to be protected too.
Intel is also looking to diversify itself from the PC chip market as the world moves to the mobile web using smart phones and iPads. McAfee’s software provides mostly recurring subscription revenue, which will help smooth Intel’s revenue and give them an opportunity to enter the growing market for securing mobile devices. McAfee now offers smart phone security software, through the recent acquisitions of Trust Digital and TenCube. These companies make security software for the iPhone, Android, Blackberry and others. Since people are 15 times more likely to lose their smart phone than their laptop, mobile device security is becoming a big business and this is another strategic reason why Intel paid so much for McAfee.
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