Intel has stunned the security industry in announcing that it will acquire security giant McAfee in a $7.7 billion purchase. In justifying the acquisition, Intel president and CEO Paul Otellini declared that security has become a "third pillar of what people demand from all computing experiences." And in a blog post, McAfee CEO Dave DeWalt suggested that the desire to develop end-to-end mobile security was part of the motivation.
Yet the deal is far from logical. The acquisition has surprised industry watchers. Gartner analyst Ruggero Contu told InfoWorld that McAfee was a logical takeover target -- just not for Intel. Previously, other market watchers had speculated that Hewlett-Packard might be the eventual acquirer.
There is no clear combination of security technology and Intel's products that would justify the risk of alienating other software and system makers. If Intel sought security talent -- people in short supply these days -- any number of smaller companies could have been acquired to fill the chip giant's ranks.
"The underlying expertise in security they get is worth a lot," saed Rainer Gawlick, chief marketing officer and acquisitions specialist at antivirus firm Sophos, a McAfee rival. But, he says, "I'm not sure why you pay $7.7 billion for that."
Sure, security has been a bright spot in this recession. For example, McAfee boasts of annual double-digit growth for the last two years and nearly 80 percent gross margins last year. Mobile threats are also on the rise, as mobile applications have been another bright spot, driven by the success of the iPhone, iPad, and Android OS.