What Intel has to do with McAfee?

Intel is the largest, and almost a monopoly producer of computer processor maker, with an annual revenue of about US$ 53 billion, R&D budget of about US$ 10 billion and rising. Its closest follower is AMD, lagging far behind in the second place, with an annual revenue of about US$ 5 billion, R&D budget of about US$ 1.3 billion and falling. Now Intel has an undisputed footing in the hardware market, bothering less about developing software systems for consumer markets. However, an interesting development that did not get much media attention was its acquisition of security firm McAfee in 2010. What Intel has to do with McAfee? What are the facts and rumors?

I would not buy the industry gossip that says Intel’s acquisition of McAfee is just a casual acquisition that has little significance. I think Intel has a definite plan and future road-map that has led it to make such a digressing move to security software market. After acquisition, Intel has let McAfee run as an independent subsidiary of Intel group- running its own R&D and culture as intact as it has been. Although McAfee security products have not been able to hold its ranking in the consumer market, in fact, beaten out by Kaspersky, Norton, Bitdefender and Eset, it has been a profitable and growing company having a command on large corporate data security market. On the other hand, unlike other security software champions, McAfee was available for bidding in the spin-off market. So Intel took the chance to buy McAfee, paying about US$ 7.6 billion in cash and put in its portfolio. It can safely be guessed that, Intel’s long-run road-map includes some sort of security research that would greatly be aided by such acquisition.

So what are those agenda of Intel? What would be the implication for future computer processors coming out of Intel’s house? According to an analysis, Intel has always been worried of data security issues, however, it became of serious concern after the much publicized “Aurora” cyber-attack from China in 2009. Buying a security arm like McAfee would give Intel advantage over R&D in data security. There are rumors that Intel will embed data security features in future processors- something like Anti-virus integrated in the hardware. This will create not only value addition through charging more than proportionate price as compared with the differential increment in cost of incorporating such software in the hardware, but also a technological edge for Intel that none others in the industry would be able to match in the short-run.

There is another option for Intel, if not incorporating the software in the hardware. Intel can just leave McAfee as it is, and work on tying/linking its sales to computer assemblers, majority of whom buy Intel processors. It would create huge synergy of Intel’s domination in the processor market with that of the upcoming domination in the anti-virus market. How would you feel when you read something on a computer box that says “Intel recommends Mcafee”?

In both ways, Intel is the winner.

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About 1mmarketing

Working as Associate Professor, School of Business, United International University, Bangladesh; a North-American graduate, with doctoral studies from UUM, Malaysia; cherishing a wide-view of the world, with multiple interests in culture, people, traveling, and specifically marketing science. I have a colorful and diversified background with a blend of corporate experience, research, consulting, training, public speaking and teaching. I love to write about marketing issues that affect our lives, and talk about its direction that would promote the greatest human welfare.
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