Experts bemused by Intel's McAfee buy

Intel will pay $7.7bn to acquire McAfee

Security experts have reacted cautiously to Intel's surprise $7.7bn (£4.9bn) move for McAfee, expressing doubts about the two firms' compatibility and even the long-term future of the security company.

One of the largest IT deals in recent years, Intel's planned acquisition has left the market reeling, and divided opinion over exactly how the chip firm intends to integrate McAfee's portfolio.

Intel chief executive Paul Otellini stressed in a conference call to announce the acquisition that it is vital to Intel. The deal will help the chip firm meet the demand from users for a secure computing experience, just as it has delivered on the demand for improved connectivity and energy efficiency in the past.

"We believe that security will be more effective when enabled in hardware," he said. "Wherever we sell microprocessors there's an opportunity for us to sell security to go with it, and not just co-selling but deeply integrating [security] into the architecture of our products."

Renée James, general manager of Intel's Software and Services group, explained that the two companies have been working together for the past 18 months on "enhanced security solutions", the fruits of which will be seen early next year.

McAfee chief technology officer George Kurtz was quick to stress the synergies between the pair, focusing on Intel's capabilities in the embedded and mobile software markets since its acquisition of Wind River.

"McAfee's strategy of protecting the multitude of devices such as ATMs, printers, digital copiers and cars, fits with helping organisations better manage and protect the IP-enabled mobile and embedded devices that run Wind River embedded and mobile software," he wrote in a blog post.

"This also dovetails nicely with McAfee's acquisition of Solidcore, a leader in dynamic whitelisting technology that already provides protection for millions of embedded devices."

Analysts, though, were sceptical about the move, expressing surprise that it was Intel that had made the move on McAfee after much speculation over the security vendor's future.

Bob Warner, a research director at Gartner, questioned Intel's need to purchase an entire company to achieve its aims.

"I was very surprised to hear Intel had made this move. Some of what the company is after it can certainly get from McAfee, but it didn't need to buy a whole company to do this," he said.

"I also fear that the hardware side of McAfee, specifically its IntruShield product, could be left to languish or maybe sold on to a third party, perhaps the likes of Juniper Networks, as it may not really fit with the firm's needs."

However, Warner agreed that the combined companies could create some powerful and interesting products at the lower end of the market, which would be good for consumers by removing the need to install software on PC devices.

Forrester analyst Andrew Jaquith was equally dubious about Intel's ability to integrate a software manufacturer into its business.

"At its core it will be hard for Intel, a hardware firm, to run an entire software division, and there is a real chance they will manage this deal to irrelevancy," he said.

Jaquith acknowledged Intel's desire to "plant a flag in the mobile security space" and to differentiate its chips by adding more functionality. But he argued that neither firm is currently a serious player in the mobile space, and that packing hardware with differentiating security features may not resonate with the market.

"Despite Intel's efforts to add more differentiating 'professional' features on and around its core processor silicon, these are seen as a bonus rather than the centrepiece of enterprise management strategies," he wrote in a blog post. "It is hard to see how 'McAfee Inside' would work out any differently. "

Jaquith added that the security market for internet connected devices, which was mentioned several times during the Intel conference call as a great opportunity, would actually offer far fewer opportunities for third-party security vendors than the PC market has in the past.

"Neither Apple's iOS nor RIM's BlackBerry OS depend in any way on hardware capabilities that Intel or anybody else could bring to the table, other than the root-of-trust embedded in the handset. All of the security differentiation is in the operating system," he said.