Intel to acquire McAfee Antivirus Inc for $7.68 billion, but why?

In a rather odd move, Intel (the company that has processors in about 80% of computers sold) has decided that they need to own an antivirus and security company.  It was announced this morning that Intel plans to buy all of McAfee's stock at $48 a share and this adds up to a total price tag of about $7.68 billion.

The first question that comes up for me is, "what does Intel plan to do with an antivirus company?"  As far as I'm aware the antivirus business isn't exactly booming. While corporations still tend to buy supported antivirus and security solutions from companies like McAfee and Symantec, more and more consumers are turning to free alternatives like Microsoft's Security Essentials.  So, in my mind, I doubt that Intel is purchasing McAfee to get a big piece of that consumer antivirus pie.

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Intel Heart McAfee

Another thought is that perhaps Intel wants to create some embedded security devices.  For instance, they could develop an on-chip security solution as part of their standard motherboard configuration, perhaps as part of the existing Trusted Platform Module (TPM). This could allow Intel to provide protection from malware at the hardware level, eliminating problems like boot sector and BIOS viruses.

Issues with this approach to antivirus include the problem of keeping the antivirus detection dictionary up to date if that data is stored in hardware as well as the need to include logic in the software to understand different types of file systems like NTFS, HFS Plus, etc.

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Intel may also be looking to build and market network security appliances.  There is already a pretty big market for these devices that are installed in a network and provide both security services like e-mail virus scanning, blocking worms (essentially viruses that spread via network protocols), and firewall protection.  While I can think of no reason why Intel and McAfee would be great in this market, it always helps to have more competition driving up feature sets while driving down prices.

Only time will tell what exactly Intel is planning do to with McAfee, however we may not have to wait long as the first products resulting from collaboration between the two companies are scheduled to hit the market in early 2011.  For more details and marketing speech, the full press release is available.

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