IT Industry Sees Defense-in-Depth As Emerging Trend With The Intel-McAfee Move

The world’s largest chip maker, Intel staged a grand entry on the deal street by snapping up McAfee, the second largest security software maker in an acquisition costing $7.68 billion. This is the largest deal inked by the California- based chip making giant in its 42 year history. According to Capital IQ, a division of Standard & Poor's, it’s the sixth biggest deal globally between two technology companies over the past three and a half years.

Intel, which makes the microprocessors used in more than three-quarters of the world's PCs, stirred up a storm in the IT industry as the news of its big ticket acquisition deal trickled in. A string of buyouts (albeit small ones) by Intel in the recent past bear testimony to the fact that the chip maker has set off on the takeover trail with its pockets bulging.

As analysts, industry watchers and rival companies engaged in rumination over the prudence of the decision, a gamut of emotions - skepticism, optimism and enthusiasm, were expressed. Nevertheless, players in the IT industry by and large confessed a sneaking admiration for the game changing move.

Intel’s move underlines the strategy that security will now be a critical feature of online computing. The security vendors conceded that the rationale behind the eye popping deal was to make security an all- pervasive feature of Intel processors.

Read It's a 'Wait-&-Watch' for Indian CIOs on Intel's McAfee Acquisition

Tony Scott, Corporate VP & CIO, Microsoft feels the deal makes sound business sense for both the parties involved in the acquisition game. “The uber truth is that if you are in the technology business you can’t ignore information security domain. Intel with the breadth of business it has definitely recognizes security as an important aspect. Hence I think this is a smart move and I m not really surprised,” he admitted.

McAfee’s arch rival and world’s top security software maker Symantec emphasizes the growing relevance and need for security protection that extends beyond the desktop. It believes that the move will take enterprise security to a next level. Vishal Dhupar, Managing Director, India & SAARC Region, Symantec said,” We agree that the future of consumer security involves protection across all devices and platforms.”

However he put forth that the deal will have a minimal impact on Symantec’s security business. “Symantec is focused on securing information and identities online as people become increasingly mobile and require access to information from anywhere, anytime, independent of a device,” he said.

The acquisition of McAfee will help better incorporate security concerns into processors, mobile phones and cash machines. Intel will now be in a position to provide enhanced hardware security at the chip level.

Even on repeated attempts, , Kartik Shahani, Country Manager, RSA India & SAARC, the security division of EMC and erstwhile Regional Director, McAfee India couldn’t be contacted. RSA India, officially, declined to comment on the development.

Kaspersky Lab was enthused by the news of the acquisition. They held that the acquisition of McAfee by Intel is a strategic step forward for both companies and will prop up the posture of enterprise security. “It is quite positive news for the market as it reinforces the fact that IT security is among the most important issues for both the B2B and B2C sectors. From an India standpoint, we foresee anti-virus piracy reducing further with the acquisition,” said Gun Suk Ling, managing director, Kaspersky Lab, South Asia.

However, she maintained that the move would intensify competition in the industry. “It is obvious that the acquisition will create more competition and drive the industry to grow more rapidly. We are confident that Kaspersky Lab is going to continue to develop products best suited for our customers need. And our customers are going to stay loyal to the Kaspersky brand,” Gun Suk Ling added.

Intel enjoys market dominance in the desktop market and with this acquisition it will be able to add value to its microprocessors. Security is very crucial and all vendors today are working towards enhancing their portfolio in terms of security. Cloud computing is increasingly gaining a foothold and with this move Intel has prepared itself to support the cloud environment. “It is their strategy to support the cloud. I presume the move will redefine the way in which desktop security is managed at the CPU level. The thrust will be on desktop security. The move drives home the point that online security is becoming critically important. It also would open a new revenue stream for Intel, which plans to sell McAfee's software alongside its chips for PCs and other Internet-connected devices. I would say that with this move Intel enters into the Holy of Holies,” said Tushar Sighat, Vice President, Cyberoam (India & SAARC).

However, the security vendors maintain that the recent development will not mould the future of security industry. “I do not expect the move to significantly change the equation in the security space. There are four different levels of security- Gateway level, desktop level, content filtering, end point protection and data leakage prevention. This development has got more to do with desktop level security and DLP. These two will get impacted. Other than that there will not be a dramatic change,” reveals Sighat.

But the move reinforces the fact that large scale consolidation in the security space is inevitable. With the focus on security getting sharper, security vendors are in a sweet spot as technology behemoths look to bolster their presence in this fast-expanding segment. Deep-pocketed technology corporations like IBM and serial acquirer Oracle are scrambling to crack deals in this area with an eye at complementing their own services.

As they flex their muscle to enhance their security portfolio, midsize vendors will be on their radar.

“Security is a technology game. Mid-size security companies are doing a lot of innovative technology work. The market in security is not so matured and it’s a growing market. The big players in the IT industry are waiting for the ripe time to acquire these mid size companies. The cash rich big players are waiting to add value to their portfolio. Hence acquisition is on the cards for a lot of companies. Niche players are quite likely to get acquired,” said Cighat.

“It’s indeed getting harder for single-product vendors in today’s scenario. Offering products with defense-in-depth is now a well accepted IT market strategy,” substantiates Scott.

Intel’s move only reflects this emerging trend.