Last week, to the surprise of many in the IT industry, Intel bought the computer security company McAfee. In an article on CIOUpdate.com, Larry Barrett insightfully describes the business context in which this acquisition was made.
During the recession that began in 2008, and even before it, technology companies have been focusing on innovating and diversifying their services. Google and Apple have been long-time leaders in this trend, especially in the mobile revolution. Oracle and Cisco, Barrett notes, have not been far behind in branching out of their traditional offerings.
Now, Intel is feeling the pressure of several years’ worth of low stock prices despite its considerable advancement of CPU technology and consistent quarterly profits. It seems that investors are not valuing these short-term gains and have feared that Intel is falling behind in the business arena.
Enter Intel’s last week purchase of McAfee, Inc. With this move, according to Barrett, Intel hopes to develop the technology of computer security at the microchip level, despite the current standard of protecting networks and programs at the operating-system and software realms. More importantly, Intel hopes this relatively new approach will catch on in the mobile market, where the digital security industry is having a hard time coping with the tremendous output of new devices and applications.
This is a risky move, as many commentators are skeptical of the very idea of security at the micro-hardware level. But if this gambit pays off, Intel could well be years ahead of the competition in providing secure processing power to smart phones and other mobile devices. Even Intel’s competitor, AMD, had struck outside its strict business boundaries when it purchased ATI Technologies in 2006 and claimed a stake in the GPU market.
As Barrett’s article makes clear, Intel had no choice but to make a bold move. In a business environment where doing strictly what you do well is not enough (in the eyes of investors), a company needs to change. This is a good thing, it seems to me. Imagine how much we would have missed out on if Google had just remained a search engine company or Apple had just continued to build outdated desktop PCs.