Yesterday’s announcement that Intel would pay $7.68 billion for McAfee, Inc. triggered a couple of instant thoughts:

1. McAfee has come a long way from when I first met founder John McAfee in the early 1990’s in a small, cluttered office in Santa Clara.
2. Intel/McAfee: What strange bedfellows!

According the Wall Street Journal article where I first read the news, Intel executives were bullish (as they should have been, after laying nearly $8 billion on the table in a surprise deal.)

“Intel executives argued growing security dangers require new measures, describing the acquisition as an essential step to design chips and other hardware that can protect systems better than software alone. …

"’We believe security will be most effective when enabled in hardware,’ Intel Chief Executive Paul Otellini said in a conference call.

In Yahoo press coverage, Mr. Otellini is quoted:

"Everywhere we sell a microprocessor, there’s an opportunity for a security software sale to go with it … It’s not just the opportunity to co-sell, it’s the opportunity to deeply integrate these into the architecture of our products."

Business week’s analysis was a bit less upbeat:

“Intel will have to persuade customers they need security in non-PC electronics in much the same way it has convinced businesses and consumers that they required chips that speed computing tasks or ensure seamless wireless connections.

“’Right now nobody is screaming for security in their cars and in their cell phones,’ said Gartner’s Peter Firstbrook.”

Forrester Research’s Andrew Jaquith was downright negative:

“What on earth does Intel expect to get for all of the money it is spending on McAfee? I’ve been scratching my head over this, and despite McAfee CTO George Kurtz’ helpful blog post, I am still struggling to figure this one out. …

“I see four problems with Intel’s strategy (at least as much as I can glean, so far):

• Neither Intel nor McAfee are serious players in the mobility market …
• Intel’s hardware platform strategy will not work. …
• Intel doesn’t understand software. …
• The security aftermarket will be very different on Post-PC devices. …”

What do I think?

1. I agree that security at the chip level is part of an integrated end-to-end security chain that will be essential in the mobile market, especially as mobile devices are enabled for mobile payments and other high-value functions.
2. I wonder why Intel had to buy a whole company to get the security expertise necessary to build in security at the silicon level.  Maybe McAfee has some diamonds in the rough hidden away in the R&D lab that will justify Intel’s big acquisition.
3. This very visible acquisition highlights the critical need for Information Security, a topic that is near to my heart.

What do you think?