Friday, August 20, 2010

Intel, what were you thinking?

This just in -- Intel has spent a huge amount of money (some US$7.7 billion) buying security software company McAfee.

What were they thinking?

Even seasoned analysts are left scratching their heads, trying to understand how this acquisition could be of strategic value to Intel, who's primary business is computer processors and support chips.

It has been rather entertaining to read the various speculation that is taking place within the media right now as to the why's and wherefore's of this move.

For example, the BBC reports that "Intel intends to build security features into its microprocessors which go into products such as laptops and phone".

ZDNet seems to think that the move is doomed.

BusinessWeek seems to think the purchase is an attempt to gain more penetration into the handheld and embedded markets where Intel has performed relatively weakly to date.

But only CNN seems to be on the money by pointing out that the takeover has no apparent rationale other than as an opportunity to invest some of its cash reserves. They suggest that Intel maybe doing this for no reason other than a pure investment strategy - perhaps technology doesn't even come into the equation.

Others, like myself however, wonder about the good sense of investing in an anti-virus software company that now faces such stiff competition and which seems to be slipping in the market. For many years, McAfee has been seen as the benchmark for AV software but in recent times its performance has come under question and many new players are nipping at its heels. Nowhere is the effect of this decline more obvious than in the price of is stock, dropping from over $45 just under a year ago to around $30 at the time of the Intel purchase.

Can Intel breathe new life into McAfee?

One would like to think that having invested $7,700,000,000 in the company, they will be working very hard to reverse any decline and revitalise the company's fortunes. Only time will tell.

In the meantime, this does reshape the landscape a little for all computer users -- albeit we may not see the effects of those changes until someone really works out why Intel really made this purchase.

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