There's no doubt that this $7.7 billion acquisition represents a major event in the security solution space. It's worth considering for a moment the underlying logic and consequences of this surprising move.
Business fashion is clearly a factor. The pendulum is swinging towards vertical technology companies, after decades of horizontal specialisation. Of course, this might be no more than this year's fad. Pendulums eventually swing back, whether driven by customer preferences or vendor ambition. The pendulum for outsourcing, for example, has just swung from mega-sourcing to multi-sourcing. That trend's clearly going the opposite way.
Financial circumstances must have a bearing. Intel has a huge amount of cash and, like anyone else in that position, will be struggling to find decent investments that can meet their appraisal criteria. McAfee also has a higher profit margin, which might enhance Intel's P&L account, at least in the short term. These considerations, however, are more of a supporting argument than a driver for the acquisition.
In fact the real motivation behind the deal is an initiative to embed more security in hardware. Intel confidently believes that McAfee's security technology will help create "hardware-enhanced security." They see security as the "third pillar of computing devices" (in addition to power efficient performance and Internet connectivity). This is a great idea in theory. It will help build the higher assurance solutions we need for the future, and help us shoe-horn security into the growing multitude of non-PC, Internet-connected devices. Intel and McAfee are reported to have been working on such developments for some time.
Past experience of security acquisitions by large vendors has also demonstrated high risks of culture clash, restructuring pains, and a loss of momentum in further product development. Smart, innovative competitors can benefit from these distractions. Large companies are less agile than smaller ones.
But new developments in hardware security will require a solid security base. McAfee can bring this to the table. The real enabler for hardware security, however, is trusted computing, and the foundations are already out there in the form of hundreds of millions of TPM chips in laptops and servers. Exploitation of this capability is still in its infancy, but that will come with time. Many laptops are being shipped with self-encrypting drives - a vast improvement on software encryption - yet few laptop purchasers seem aware of this. And when skilfully combined with virtualisation technology, trusted computing offers tremendous opportunities for innovative, security solutions.
So hardware security is certainly coming our way, though it might not take the form initially suggested by an Intel/McAfee merger.