Why would they do this? It seemed obvious to me than in 5-10 years Antivirus software would be obsolete and unnecessary. I hear people every day recommending Windows 7 users get Microsoft Security Essentials and nothing else. And personally I run Ubuntu, so I haven't thought about antivirus software in years...
This seems like a very odd decision to me. Intel, a world leader in processor design, does not need to get into such a sleazy business as antivirus software.
Why not spend that $7.7 billion helping the world write better code?
My guess is that they will be able to use their existing OEM relationships to push for McAfee to be installed by default (and paid for, not just a trial) on more and more computers.
McAfee also seems to be moving into different areas of computer security lately (PCI scans, etc), so it's not just anti-virus. I am not sure what % of their business this is though.
McAfee do more than just desktop antivirus: for example, they have mobile, virtualisation and network security products. see products by category here:
http://www.mcafee.com/uk/enterprise/index.html
Intel has a large interest in mobile, virtualisation and network arenas; this isn't really as surprising as you make out.
McAfee also has strong UI programming expertise that Intel sorely needed. Intel's IPP and MKL libraries are absolutely great, but VTune looks like it is fresh out of 2002. They get access to several stable revenue streams (like antivirus), and can cherry-pick talent to work on whatever projects they want. There aren't many downsides for Intel.
We're talking about $7.7 billion. I'm not sure it's quite as rosy a picture as you paint. I'm not that familiar with McAfee's annual profits, but even if they make $500 million a year, we can value the talent they cherry-pick at an absurdly high value of $1 billion, and it would still take Intel well over 10 years to recoup the investment, assuming stable revenue streams.
Thanks, I was about to head into a meeting and didn't have time to do the research. Assuming $175 million in profits per year, that means 44 years to breakeven, ignoring the talent acquisition angle. How much are 20 (or even 50) good programmers worth?
Several other companies in that market went down a similar amount, so it doesn't seem to be extraordinary. I would expect a lot of tech investors to move their money to McAffe after that announcement hoping to get something out of it.
What matters is what happens after now. If it continues to go down for a long time, it might be a problem.
They would be ecstatic with that kind of return. Without growth and still making a hefty return. McAfee has ~$2b in revenue but an operating income of "just" $221m.
A simplified perpetuity of $175m @ 6% would have a PV of ~= 3b. I'm having trouble seeing how they'd ever break even based on profits alone. I just can't imagine what kind of integration with existing products they think will add another 4.7b.
It seems strange that Intel is investing in this particular sector that leverages mostly Windows stuff. They should move out of Steve Ballmer's basement and make their own OS.
Why do they want to make software for platforms when their competencies are on hardware?
One that doesn't look like a antivirus program for Windows.
"They should move out of Steve Ballmer's basement and make their own OS." and "Why do they want to make software for platforms when their competencies are on hardware?" at the same time.
They're leapfrogging to a niche market of going from hardware to security on the Windows platform. What's the gain in getting into an specific platform's flaws (antivirus) and development environment? That's the corner of the platform itself, not to mention the scope of the OS industry.
If they want to do software, they should develop a OS, maybe for Atom or some kind of mobile platform or otherwise.
My bullet points are just pointing out some icing on the cake that comes with the deal.
"Why do they want to make software for platforms when their competencies are on hardware?"
Vendor lock-in and community are just as helpful for Intel as they are for other businesses. If they can grease the wheels for their primary business (even at a small loss), then it's not necessarily a bad idea.
In April they issued an update that accidentally targeted legitimate Windows system files, causing the updated boxes to bluescreen. Astounding enterprise-level incompetence.
maybe they weighed their options, and found that buying the company straight for 7 billion is cheaper than suffering through more downtime caused by McAfee software.
Oh yeah, McAFee has given blue screen to me many times. I bought Dell laptop for me and my gf. After McAFee free one year subscription expired, we decided to move to different anti virus. Once we uninstalled McAfee, both of our laptops got blue screens and crashed. My friend also had same experience with two of his computers.
Well what worries me is mostly "what's going to happen to my job now?" I'm not some higher-up so... outlook isn't great. I've seen enough mergers to know how that usually goes.
So! I'm officially bad luck with businesses (was around just as CompUSA got liquidated, now McAfee acquisition), anyone wanna hire an MIS major with a burning desire to learn stuff solely for the sake of learning?
But in all seriousness, I've been speculating over the reasoning behind Intel doing this, and haven't come to many conclusions. As some others here have stated, McAfee actually has quite comprehensive network security (I've obviously seen the network layouts / architectures), etc, and maybe Intel just wants to try and market that?
I have yet to come up with a good reason - they are pretty disparate companies from what I can tell. There are "some" common grounds, but not many.
Is McAfee really worthier than Sun? If IBM took a deal with Sun at that high, the Sun would have moved around the earth and Oracle doesn't stand a chance to slur the OS community!
I'm definitely biased as a MS employee, but I can't underscore enough MSE as an Antivirus solution - it's the least annoying AV on the market and has the least perf impact on your system. Literally, you install it and it only bothers you when it absolutely has to.
I work at a small antivirus company. I'd be interested in knowing how helping people whose computers are infected get them uninfected is a "sleazy business".
Last week I spent two solid days rebuilding from scratch my mom's PC from it's OEM Windows XP Home installation after some hostage type malware managed to defeat it's not quite state of the art defenses (e.g. AVG). You aren't doing anything sleazy at all assuming your stuff is really good (that includes your not working for AVG :-).
You're probably encountering one of those hard to shake off guilt-by-association theories, and working in the field, I'd be surprised if you are genuinely unaware of it.
To most people, computer security is a mystery box inhabited by criminals who try and break in, and Mafia-like organizations who offer protection for a fee.
Right now, large companies have so much cash available to them, on such attractive terms, that acquisitions don't have to be a terribly good fit to be attractive. It's just time to buy.
I think there's a bit of an agency problem on that one. Paying large dividends to return cash is sometimes a good choice for investors, but some executives, especially in tech, see it as some kind of failure: you're doing the opposite of an IPO, giving money back because you admit you don't know what to do with it! A bold new move is more interesting from an empire-building point of view.
No wonder the only winners are usually the banks and legal advisors, and sometimes senior management at the acquired company. As an INTC shareholder I am pissed about this. A 60% premium? WTF.
Who wants to bet Goldman took a large, long McAfee position in the last couple of days? From an unrelated portion of the company, performing usual hedging activities, naturally :-)
The glass-steagall act which was repealed in the late 90s and which many people point to as the key piece of deregulation that kicked off the housing bubble?
Yeah, they are definitely on the straight and narrow, I will tell you that much. And that is the reason we know that our regulatory system is beyond broken. Goldman probably put up the loan for the deal and maneuvered it all into place, because naturally their advisory services are in synergy with their other products.
Could you please tell me if technically you can have security hardware based? Apple now competes with Intel, even in hardware. Would it make sense for Intel to have a "more secure" processors?
and so on, of which Intel is currently involved with lots.
Security is what a desktop processor spends a lot of it's time doing: making sure programs are isolated from one another and the kernel whilst still executing code.
vPro as well, which I strongly suspect is what this is about.
Intel want to put AV underneath the operating system (ie. under Windows), using their virtualization technology to make it invisible to the OS. This was one of the ideas behind their "failed" vPro project[1].
Good lord, please no! We need to make viruses so slow and painful that every OS designer must make their OS resilient to them. This is a stupid problem to have at all, the last thing we want is to bake in into the bloody hardware!
Intel offered 60% more than McAfee was worth yesterday. Basically if you buy MFE now (up 57% as I write), you're essentially just buying a bond with a 3% return between now and when the stock switches to Intel. Of course, there's always a chance the deal isn't completed for whatever reason.
As for Intel going down, I would sell too. I don't really see how this deal makes sense.
Very true. My point was that this just seems like a bad idea to me, and it would scare me from holding the stock if management keeps making deals like this.
I think this is indicative of a real risk we will see with large corporations right now. Many of these large cap companies have huge cash hordes and are being pressured to do something with it. The risk is that the cash will be used stupidly to do poor deals and I think the market is indicating that this McAfee deal is a bad one.
Their shareholders would have probably been better suited with a special $7B dividend instead.
Not necessarily - I think it has the potential to be a very good move for Intel.
I thought about my last post more, and I can think of a few applications where it could give Intel some huge advantages.
Something that came to mind: We all agree that AV software eats CPU cycles. What's to say Intel can't just start putting custom hardware that is designed solely to offload signature checking onto a separate chip? With the increasing sizes of detection databases (anomalies, threats, etc), eventually it will get to a point where the typical CPU cannot feasibly cross-reference known threats AND perform proactive checking in a fast enough environment to make it useful.
Not to mention network detection via the same means. Pretty soon you will be seeing motherboards or at least CPUs that have other dedicated hardware to checking signature sets on an extremely fast basis versus having to try and mix other, non-security-related cycles with what I'll call "user" cycles.
No thank you! AV software is not security, it's a stopgap measure for when you have to "do something" but are too lazy to implement real security measures. And McAfee is one of the lowest quality AV vendors out there (remember when they pushed out a definition update that made XP instances unbootable? that costs a lot of people a lot of headache, and millions of dollars).
It isn't software at that point as you would normally think of it - it would be a dedicated hardware piece that simply cross-references signatures with a known detection library and reports to the Intel chip.
And you think end users have any grasp of how to implement "real" security measures? Oh hell no. Joe Schmoe at XYZ web design corp is inevitably gonna download that porn at work and get some worm.
Agreed. Just wait till they push the signature to the flash om some special chip that calls a vital windows binary a virus. Not only will you not be able to boot, you won't even be able to reinstall, or pxe-boot, or run a live cd...
Aye. And imagine how much damage false-positives can have on smaller software companies. A company like MS runs all of its binaries through the major virus scanners as a matter of course for any release build, not just to check for viruses but to make sure that they don't get tagged by a broken heuristic detector or some such. But not every company has that luxury (and even so, it didn't save XP from McAfee's blunder).
Besides which, all AV amounts to variations on turd polishing. You'll never achieve robust security through black-list methods.
I think you're on the right track, but I don't believe this is about AV on the desktop. Enterprise-grade AV is a much bigger business, and tends to get pushed in to categories like IDS/IPS, web proxies, and email scanning. This all of happens "in the network" before packets ever hit your pc. It's extremely regex heavy, and in order to scan at high data rates we often rely on purpose-built regex accelerator cards.
If Intel bought this in CASH, that would be silly, most likely they took our a low interest rate loan and used the cash to back it.
The fact that deals like this are happening means that the gloves are off and companies are not bunkering in anymore for a nuclear winter.
Also since this is just into 3rd qtr, this means that the company is not worried about 4qtr reports, this is clearly a sign of getting a head start on growth. I wonder how long the integration will take, 3 months would put in in 4qtr with something for Christmas?
Seems like a management misunderstanding, or they really believe in a long life of MS. Even their own MeeGo (which is just a bunch or rpms) doesn't require any proprietary security solution, leave alone Android.
Of course, they could create and start to push some artificial, unnecessary security framework, but to whom? Some mobile Windows 7 on Atom I guess.. ^_^ which obviously a born-dead platform, same as this MeeGo.
This makes perfect sense and will further drive us to buy more and "better" hardware. The software will slow down the comp so much so that you'll want to continually buy new hardware in the hopes of making things run faster! Intel is an evil genius.
Lost all remaining respect for Intel with this bone-headed move. McAfee and Intel headquarters are within walking distance of each other. Perhaps the CEOs met for a few drinks at Birks and decided to do this. Make absolutely no sense at all.
Not that I've bought any anti-virus stuff since we stopped using Microsoft. In fact, the anti-virus stuff was a good part of the decision to quit using microsoft completely. It turned perfectly good computers in to space heaters.
I don't think we'll see any change to AV on the desktop. That's not a fast-growing market. Enterprise-grade security "in the network" on the other hand is a multibillion dollar market, and growing fast. Signature-based detection is still the premier way of blocking threats like email spam and malware. In order to scale to the higher bandwidths that today's networks run at, it's necessary to use purpose-built hardware for network and regex processing.
Why is this voted down? It's true, no-one here has a coherent, rational understanding of why Intel has made this move. Everyone is asking why and no-one can comprehend the move. Nothing wrong in that. Either Intel has a crafty powerplay or they are off plan.
Surely the issue isn't calling AV snake oil. Really. In this audience?
It's always interesting to see the business press scratch its head after baffling acquisitions like this and try to spin a coherent explanation of how the two companies fit together. The same thing happened when eBay bought Skype, but wishing didn't make that deal logical either.
Intel just bought Texas Instruments cable modem division so maybe they're looking to make a big push into the CPE market? x86 all-in-one gateways with embedded security & AV scanning perhaps? McAfee has tons of deals with ISPs so this would be a big foot in the door for Intel to push not only IP gateways but other types of set tops too. $7.7B is a big price tag but if my theory is correct you need to look at it in perspective of how many CPE devices are sold per year -- cable modems, routers, set tops. Presently they're all using ARM, PPC or MIPS chips. That's a huge potential growth area for low power x86. Wouldn't surprise me to see Intel pickup Motorola's set top business in the near future.
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[ 3.5 ms ] story [ 162 ms ] threadThis seems like a very odd decision to me. Intel, a world leader in processor design, does not need to get into such a sleazy business as antivirus software.
Why not spend that $7.7 billion helping the world write better code?
McAfee also seems to be moving into different areas of computer security lately (PCI scans, etc), so it's not just anti-virus. I am not sure what % of their business this is though.
At least it's not obnoxious.
Intel has a large interest in mobile, virtualisation and network arenas; this isn't really as surprising as you make out.
Intel's stock only took a small dip, and it looks like some of those who left were shifting it to McAfee to ride the wave as the stock went up.
That's a lot of investors in an otherwise volatile market not jumping ship, so they must see something good in the deal that we're missing.
http://www.google.com/finance?client=ob&q=NASDAQ:INTC
Several other companies in that market went down a similar amount, so it doesn't seem to be extraordinary. I would expect a lot of tech investors to move their money to McAffe after that announcement hoping to get something out of it.
What matters is what happens after now. If it continues to go down for a long time, it might be a problem.
Still not sure if I agree with the deal, and it does seem driven by a bunch of cash burning a hole in Intel's pocket.
It seems strange that Intel is investing in this particular sector that leverages mostly Windows stuff. They should move out of Steve Ballmer's basement and make their own OS.
Why do they want to make software for platforms when their competencies are on hardware?
One that doesn't look like a antivirus program for Windows.
"They should move out of Steve Ballmer's basement and make their own OS." and "Why do they want to make software for platforms when their competencies are on hardware?" at the same time.
If they want to do software, they should develop a OS, maybe for Atom or some kind of mobile platform or otherwise.
Antivirus is back and to the left.
> maybe for Atom or some kind of mobile platform or otherwise.
I believe that's MeeGo (http://meego.com/).
"Why do they want to make software for platforms when their competencies are on hardware?"
Vendor lock-in and community are just as helpful for Intel as they are for other businesses. If they can grease the wheels for their primary business (even at a small loss), then it's not necessarily a bad idea.
Yeah, that won't have antitrust implications, or anything.
http://en.wikipedia.org/wiki/United_States_antitrust_law
Disclosure: Used to work for Secure Computing, but not the snapgear division.
So! I'm officially bad luck with businesses (was around just as CompUSA got liquidated, now McAfee acquisition), anyone wanna hire an MIS major with a burning desire to learn stuff solely for the sake of learning?
But in all seriousness, I've been speculating over the reasoning behind Intel doing this, and haven't come to many conclusions. As some others here have stated, McAfee actually has quite comprehensive network security (I've obviously seen the network layouts / architectures), etc, and maybe Intel just wants to try and market that?
I have yet to come up with a good reason - they are pretty disparate companies from what I can tell. There are "some" common grounds, but not many.
To most people, computer security is a mystery box inhabited by criminals who try and break in, and Mafia-like organizations who offer protection for a fee.
Right now, large companies have so much cash available to them, on such attractive terms, that acquisitions don't have to be a terribly good fit to be attractive. It's just time to buy.
Who wants to bet Goldman took a large, long McAfee position in the last couple of days? From an unrelated portion of the company, performing usual hedging activities, naturally :-)
And with Goldman under the regulatory microscope right now, I bet they are on the straight and narrow.
* http://en.wikipedia.org/wiki/Trusted_Platform_Module
* http://www.intel.com/technology/anti-theft/
* http://en.wikipedia.org/wiki/NX_bit
and so on, of which Intel is currently involved with lots.
Security is what a desktop processor spends a lot of it's time doing: making sure programs are isolated from one another and the kernel whilst still executing code.
Intel want to put AV underneath the operating system (ie. under Windows), using their virtualization technology to make it invisible to the OS. This was one of the ideas behind their "failed" vPro project[1].
http://en.wikipedia.org/wiki/Intel_vPro#Security_and_Intel_v...
[1] Yes, I know vPro didn't "fail", but parts of it did, including an earlier attempt to shovel AV under the OS.
Just Six Corporations Remain
http://www.theonion.com/articles/just-six-corporations-remai...
Seems investors think this is better for McAfee than Intel, too.
As for Intel going down, I would sell too. I don't really see how this deal makes sense.
Their shareholders would have probably been better suited with a special $7B dividend instead.
I thought about my last post more, and I can think of a few applications where it could give Intel some huge advantages.
Something that came to mind: We all agree that AV software eats CPU cycles. What's to say Intel can't just start putting custom hardware that is designed solely to offload signature checking onto a separate chip? With the increasing sizes of detection databases (anomalies, threats, etc), eventually it will get to a point where the typical CPU cannot feasibly cross-reference known threats AND perform proactive checking in a fast enough environment to make it useful.
Not to mention network detection via the same means. Pretty soon you will be seeing motherboards or at least CPUs that have other dedicated hardware to checking signature sets on an extremely fast basis versus having to try and mix other, non-security-related cycles with what I'll call "user" cycles.
And you think end users have any grasp of how to implement "real" security measures? Oh hell no. Joe Schmoe at XYZ web design corp is inevitably gonna download that porn at work and get some worm.
Thats one deep rabbit hole.
Besides which, all AV amounts to variations on turd polishing. You'll never achieve robust security through black-list methods.
But for end-users that aren't behind a corp firewall / NAT / etc, this is an easy solution that they don't have to worry about.
Out of sight, out of mind (CPU cycles) sells, unfortunately.
The fact that deals like this are happening means that the gloves are off and companies are not bunkering in anymore for a nuclear winter.
Also since this is just into 3rd qtr, this means that the company is not worried about 4qtr reports, this is clearly a sign of getting a head start on growth. I wonder how long the integration will take, 3 months would put in in 4qtr with something for Christmas?
What other software could Intel be looking at?
Of course, they could create and start to push some artificial, unnecessary security framework, but to whom? Some mobile Windows 7 on Atom I guess.. ^_^ which obviously a born-dead platform, same as this MeeGo.
that's like trojan buying a porno studio, sure they're in a related field but where the heck is the synergy?
I was hoping something like this would break through:
http://en.wikipedia.org/wiki/Capability-based_security
Not that I've bought any anti-virus stuff since we stopped using Microsoft. In fact, the anti-virus stuff was a good part of the decision to quit using microsoft completely. It turned perfectly good computers in to space heaters.
AV is snake oil. What do Intel have in mind?
Surely the issue isn't calling AV snake oil. Really. In this audience?