Intel's purchase of McAfee not a game changer for security

Intel Corp.'s acquisition of antivirus software company McAfee Inc. will provide the computer chip manufacturer with real-time data about cyber threats that could influence how security is managed at the processor level, but it will have little direct impact on product development, according to security experts.

Intel announced on Thursday that it had agreed to pay $7.68 billion in cash for McAfee, which will function as a wholly owned subsidiary of leading chip producer.

"Naturally, we'll have access to bright people, but McAfee will continue doing what it has been doing, and [Intel] will continue to have strong relationships with other software companies as well," said Patrick Ward, a spokesman for Intel.

Most analysts said owning a subsidiary with 80 percent gross margins can provide a source of cash for a company that arguably plays in a commodity business with very tight margins. The acquisition also aligns strategically with Intel's sharper focus on security. In March, Intel launched the Xeon Processor 5600 series, which claims to provide faster encryption and decryption.

"Intel is very conscious about their presence in the federal market and very conscious of the often unique security requirements of that market," said Ray Bjorklund, senior vice president and chief knowledge officer at FedSources. "Chip-set manufacturers are increasingly refining their integrated circuit architectures to achieve better performance [and] secure information flow at the chip level. McAfee has an intimate understanding of the hourly evolution of cyber threats. Merge the two together and you should have real synergy."

Peter Firstbrook, a security analyst with Gartner, said McAfee is a good investment for Intel because it gives Intel a position in the recession-proof security market. But he noted significant differences in the two companies' customer base and routes to market could limit the upside potential for Intel.

"Chip vendors work on long-term, well-planned cycles, while security companies have to be much more reactive to market conditions," he said. "While there can be some [intellectual property] and [research and development] at McAfee that [could] help Intel in its goal of offering more security features in its chip sets and related software utilities, it's unclear that they needed to own the company to deliver this."

McAfee's existing software portfolio, which focuses on intrusion detection, antivirus and firewall technology, offers little opportunity to enhance security features of the microprocessor, said Amit Yoran, chairman and chief executive officer of security software company NetWitness and former director of the Homeland Security Department's National Cybersecurity Division.

"I don't feel this strategically changes the landscape of security capabilities that Intel can bake in, nor do I expect the McAfee product line to significantly improve now that the company is owned by Intel," he said.

Firstbrook also questions the strategy of relying too heavily on security at the hardware level. "I agree that baking more security into all layers of a system is good, [but] it is difficult to believe that Intel will somehow be able to solve security at the chip layer," he said. "The major impediment with relying on hardware based security is the trend towards a more heterogeneous environment; at no point in the future will a consumer or a business have all Intel devices."