According to PCWorld the "Intel (INTC)-McAfee (MFE) Deal Puzzles Security Analysts."
But the deal is only surprising if you look at Intel the way PCWorld (and many others I'm sure) do. It says:
"the move makes little sense for a pure hardware firm."
(By the way, PCWorld means Security in that headline as in computer security, not as in people who analyze items traded in the securities markets.)
The inoperative words are "pure hardware firm." No one is a pure hardware firm anymore or a pure anything firm. The suppliers in information technology (IT) are sorting themselves out to be one of three types: disparate technology suppliers such as Intel, Oracle (ORCL) and EMC; "IT stack suppliers" such as SAP with its acquisition of Sybase, TIBCO (TIBX), Lawson (LAWS) with its acqusition of Healthvision; and IT-enabled business services providers such as IBM, Intuit (INTU), Google (GOOG) and many others.
That does not mean that the "IT stack suppliers" will not deliver their functionality as services (in the cloud if you want the buzzword du last year). Increasingly they will. But it will be for IT as a service, not business assistance as a service enabled by IT. There is some possiblity that Oracle will move into this camp but everything they do and say makes me put them in the technology supplier camp.
Notice that I did not peg Microsoft (MSFT). It still doesn't know what it wants to be when it grows up. Certainly it does not fit in the technology supplier camp; its technology is consistently behind the curve. But I'm not sure which of the other two possibilities it will choose. Its choices are compounded by its major presence among consumers.
The three camps have to be judged differently by investors.
- Technology suppliers need to deal well with low-margin, high-volume commodities marketed primarily via indirect channels
- Stack suppliers need to differentiate themselves from one another while incorporating technology from the "right" technology suppliers and building an increasingly robust online distribution channel, less dependent on costly sales and support staffs
- Business services suppliers will be judged on business acumen; where they get their technology and how they deliver it is less important than happy direct customers that increasingly give up "not invented here" attitudes and turn to those that know the ropes. This has already happened in payroll processing and similar business process outsourcing categories
When you look at Intel-McAfee in terms of these three buckets, McAfee is simply bringing another very important disparate technology to THE premier technology supplier. As PCWorld notes, it had to do it. EMC already has RSA and it will only be a matter of time before Oracle gobbles up one of the remaining security software players.
-- Dennis Byron
(no interest in companies mentioned except for a trivial amount of shares in EMC hoping lightning stikes South St. in Hopinton twice)
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