Fast Company

Intel Expands its Empire: Buys McAfee for $7.7 Billion

intel-mcafeeIntel's plans for its future are diverse and impressive--if it all comes good, Intel hardware will be powering everything from your desktop PC to your smartphone to the entertainment center in your car. But that doesn't mean it can ignore the other, softer side of the computer business, so it's just revealed it'll be buying PC security firm McAfee.

The deal amounts to $48 per McAfee share (reasonable, given that the price has sharply spiked today, driven by this news, and is now running at almost exactly that rate), and has been approved by the board of directors on both sides. All that remains before it can be completed is to gain regulatory approval.

But what's actually going on here? This deal has come as something of a surprise to everybody, since McAfee is all about protecting PC users from viruses, and Intel is all about the ultra-high-tech business of designing CPUs to power the PCs themselves. McAfee has also been in the news a fair amount recently, and not necessarily for good reasons: Its founder John McAfee has "run off" to Belize, chased by law suits, to search for new sources of antibiotics in the jungle. And back in April the firm released a patch for its Windows XP installation that was so flawed it wreaked havoc on thousands upon thousands of user's PCs. Not necessarily the firmest ground to be establishing an acquisition upon.

Meanwhile Intel is facing increasing competition from ARM-based chips in all sorts of markets that it traditional dominates--from servers to smartphones. It's also just been found guilty of monopolistic practices by the FTC in the U.S. and had to pay a fine of nearly $1.5 billion to the E.U. earlier this year for the same reasons. 

In a statement on the acquisition, Intel even failed to sound smart: "Security is now a fundamental component of online computing" it argued, completely missing the point that security should always have been considered a "fundamental" part of online computing. Can we blame Intel for all our thousands of infected Windows PCs? Not really. But other words among the firm's statement do illuminate what's going on--they highlight that security should be considered from a viewpoint that synthesizes the software, hardware and services of a particular device. This is a pretty enlightened viewpoint (at last!) and implies that future Intel chips will be designed with at least one eye on how chip-level technology can influence the online safety and security of PC owners.

Or the whole thing could be simpler: Intel makes chips that power the majority of PCs. The majority of PCs are targeted by viruses and malware, and these attacks are increasing. So why not complete the circle, and buy the company that pretty much started off the PC security software business all those years back? Because there is, and is always going to be, a bunch of cash in ridding PCs of infections (a modern interpretation of the wondrous British saying "where there's muck, there's brass" perhaps). And here is revealed one tiny matter that conspiracy theorists may have a field day with: If Intel makes the CPU of your PC, and now owns one of the biggest anti-virus software firms, is there any financial incentive for future McAfee's to be 100% effective in ridding your PC of malware? Because if malware was wiped out, McAfee's income would be wiped out. And we know Intel is already fond of, ahem, questionable business habits ...

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