Six years and a few weeks ago I published the post entitled, “McIntel, 4 Potentially Disruptive Outcomes” at a now abandoned corner of cyberspace . The occasion was Intel, my first Silicon valley employer from 1992-95, buying McAfee, my last employer from 2008-2009, for $7.6 B . Today, it was announced that Intel had sold 51% of McAfee to private equity firm TPG for $3.1 B in a deal valued at $4.2B. I am no financial wiz, but it sure seems like the deal either valued McAfee at $6.07B, OR Intel actually got a net of $2.1B, but regardless, this transaction clearly does not look like a winner for Intel investors.
So, I will call the deal at a minimum an admission of failure, if not an #EpicFail. In my blog of 2010, I identified what I felt were 4 large opportunities for Intel to leverage the McAfee asset. They are detailed in the aforementioned blog, but in summary were:
- Disruption of AV market distribution through embedded desktop/laptop security
- Leverage high performance Intel chips in McAfee Network security solutions
- Cloud security
- Aligning McAfee to Intel’s Apple OEM business
As far as I know, none of this happened. Most of my connections to McAfee and Intel and long moved on, but what little I did hear was that Intel and McAfee were never well integrated, and the businesses, though both very desktop and server bound, were never well connected. Whether this was a failure of strategy, execution or both, I will leave to those with much more data than I have.
When I left McAfee in 2009, they had a growing enterprise and consumer desktop business, a thriving $500M network security business, and an emerging Cloud Security business. And while I don’t follow them closely, my sense is that macroeconomics and industry trends have laid siege to the first and second, and newer start-ups have captured most of the third. The fourth as far as I know was likely a victim of both Apple and Intel’s focus on mobile investments.
More importantly, at least in the $500M network security business, we had truly established market leadership in two key segments, Secure Web Gateways and Intrusion Prevention. Now, while I am sure both of these business are doing OK, the Web Gateway is being led by new Cloud based entrants like Zscaler and the IPS market has shifted through consolidation by Firewall vendor Palo Alto Networks and others. The market context was beginning to shift in both of these markets even before I left in 2009. We were adjusting and reacting. I wonder if the product, messaging and market leadership we had could have led and kept up with those shifts without distraction of “Intel Security”
Where the McAfee business would be if it had not been engaged in what certainly from the outside seems like a failed attempt at synergy? Once again 1+1 seems to equal less than 2. Or in this case, $4.2B certainly equals less than $7.6 B. Maybe this is the “pit of despair” that McAfee needs to emerge from on their Hero’s Journey. I wish them luck and success in their re-birth and re-entry into the market as an independent vendor.