You have to hand it to firms like Intel and Microsoft.  When they are determined to succeed in a new market, they try and try again -- and if that doesn’t work, then they go out and buy their way into the market.  Last week, Intel announced the acquisition of McAfee, a successful security software company, for $7.8 billion.  This acquisition may play an important part in Intel’s plans to be a major player in the wireless handheld market, something that they haven’t yet been able to achieve despite a lot of effort.

This the second in what is likely a series of actions Intel is making to become a major player in wireless handhelds.  The first strategic announcement was made on February 15th of this year at the GSMA Mobile World Congress in Barcelona.  At that time, Intel & Nokia announced that they would work together to support a new Linux-based OS called MeeGo (merges Intel’s prior Mobilin efforts with Nokia’s Maemo).  An earlier announcement by Nokia suggested that it intended to possibly use Intel’s processors in some future Nokia mobile devices. 

If Intel was going to acquire a security software company, why didn’t they acquire Symantec, clearly the market leader?  That might have made sense, but it would definitely have been a lot more expensive.  And since Intel plans to embed much of McAfee security software into future processor chip offerings, Intel likely took the lower cost route to the same destination.

The reason that the McAfee acquisition makes sense for Intel in the wireless handheld market is simply that security is going to become more and more important to both enterprise customers and consumers. 

Think about what it’s going to be like using your SmartPhone or tablet to manage mobile commerce (see Inside Mobile, July 28).  You’ll be checking bank balances, transferring funds, buying stuff online, using coupons, etc.  You’ll eventually see NFC chips added to wireless handheld devices so they can be used as a mobile wallet in retail stores.  And you’ll be storing thousands of songs, photos and videos in these devices as well.  Wireless handhelds are going to hold a lot of personal information.  And, when that happens, security is going to be a very important part of the entire user experience. 

For example, what if someone picks up your wireless handheld and starts transferring funds to their account?  Or, what if they buy things?  Or, what if someone simply extracts the information off your wireless handheld?  Or, what if you lose it?  Or, what if it’s stolen?  As more important information resides on your handheld, the more valuable the wireless handheld becomes to you. At this point it becomes very important to add security precautions to prevent unauthorized access or use.

In order to protect your wireless handheld device, you’ll need to have a combination of password protection, encryption and biometrics (such as fingerprint verification so each mobile commerce transaction can verify it’s really you and not someone else claiming to be you).  Perhaps Intel will buy a biometric security firm like UPEK and integrate the fingerprint verification sensor and cursor controller into millions of wireless handheld devices.

McAfee will likely give Intel access to more security specialists and the ability to hardwire more security features into future chips, many designed for the wireless handheld market. This past May, McAfee acquired Trust Digital (a mobile enterprise management player) and mobile security specialist tenCube.

Perhaps a bigger question for Intel in the wireless handheld space is whether their Atom processor line will be adopted by enough partners to give them a sizable market share in either the SmartPhone or tablet market. 

Nokia has announced plans to work with Intel on future processors but hasn’t yet made a commitment to adopt the Intel Atom processor in its phones.  Apple isn’t a prospect as the company makes its  own A4 chips that power the iPhone and iPad.  Samsung may be out as it has started making its own processors for the Galaxy line of SmartPhones. 

RIM might be a prospect and, of course, Microsoft could be a partner for Intel (as it has been in the past for netbooks) for its new Windows Phone 7 platform as well as HP/Palm for its webOS platform.  NVIDIA is now building the Tegra chip for the wireless handheld market. Tegra is a license of the ARM core -- much like what both QUALCOMM and TI have done, both licensing the ARM core to build lines of processors for SmartPhones.

At some point, you’d think that Intel would consider acquiring ARM or at least license ARM core architecture (much like Apple, QUALCOMM, NVIDIA and TI have all done) so that software on ARM-based processors would enable easy migration from one wireless handheld platform to another.

ntel may be a more viable player in the emerging tablet market instead of the SmartPhone market since the SmartPhone market already has major incumbents such as QUALCOMM (with their Snapdragon processor) and TI. 

It’s a very competitive and, at the same time, wide-open market.  No clear leader has emerged.  But, with Intel’s acquisition of McAfee and likely other strategic initiatives, ‘Intel Inside’ may very well be an accurate statement for many hundreds of millions of wireless handheld devices in the not too distant future.  Stay tuned.

Written By:

J. Gerry Purdy, Ph.D.
Principal Analyst
Mobile & Wireless
MobileTrax LLC
gerry.purdy@mobiletrax.com
404-406-5309
 
Disclosure Statement: From time to time, I may have a direct or indirect equity position in a company that is mentioned in this column.  If that situation happens, then I’ll disclose it at that time.