Intel buys McAfee: My two cents

Before the bell rang on Wall Street, Intel shocked the army of Latte sipping financial wonks by announcing its intentions to buy security leader McAfee. The deal is valued at $7.7 billion or $48 per share, about a 60% premium on the stock price.A few financial analysts who cover Intel say that this is about Intel’s mobile device aspirations. Maybe, but McAfee just got into the mobile device security market and my guess is that this business accounts for $5 million in revenue or less. Sorry Wall Street but that ain’t it at all. I believe that Intel sees the same thing I see. The security market is wildly fragmented with vendors producing tactical point products for its customers. These point products can no longer address the environment of sophisticated and massive threats. In the very near future, enterprise and service provider security technologies must deliver unprecedented levels of scalability, manageability and integration. Guess what? In today’s market there isn’t a single vendor who can deliver a security product suite anywhere near what’s needed in the market. Get it Wall Street? There is massive emotional demand but no supply. Here’s the kicker — without significant improvements in security, this whole Internet party hosted by companies like Amazon, eBay, Facebook, Google, etc. could get realy, really ugly soon. To be fair, McAfee can’t deliver the level of scale, manageablity and integration that the market demands but its as close as any other vendor. Combine this with Intel hardware, money, and brainpower and you’ve gotten something. I believe Intel sees a market opportunity not a product opportunity. Yes, there is plenty of room to integrate McAfee with mobile phones, microprocessors and NSPs but this is a footnote to the story. A few other observations:1. With its deep pockets, Intel should free McAfee to continue to bolster its portfolio. McAfee should grab ArcSight soon to fill its security management gap with an enterprise leader.2. The next logical candidate to double down on security are IBM and EMC/RSA. The next logical target, Check Point, maybe others like Fortinet, Sourcefire, RedSeal, Nitro Security, LogRhythm, etc. 3. While Symantec’s position just got stronger, Wall Street is waiting to see how the company will digest, integrate, and build upon recent acquisitions PGP and Verisign.4. If there is a better CEO success story than Dave DeWalt’s, I’m not aware of it. DeWalt came in a few years ago when McAfee was knee deep in a stock options scandal. He took over, changed the culture, acquired well, pointed the company at the enterprise and voila, sells the whole enchilada to Intel. Not sure if Dave will stick around but I’ll bet HP’s interest in him is sky high.5. The combination of Intel and McAfee is a “dream team” for the feds cybersecurity efforts. The two together have security software and can throw massive amounts of hardware at monitoring, filtering, and recording all of the traffic on Federal networks. McAfee already gets hundreds of millions from the Feds. I can see this revenue going beyond $1 billion over the next few years.