First up, let me explain the title of this blog post: I’ve entitled it “In the Wake of the Week,” in honor of my favorite sports column growing up, written by Bud Geracie, a former sports reporter for the San Jose Mercury News. As a sports fanatic growing up in the Bay Area, I always looked forward to reading Geracie’s column on Sunday morning. It was the perfect recap. The column featured several, very short comments/thoughts (here’s example of the column) that uniquely captured the prior week’s news and information in a very easy to read, informative and, at times, humorous way. That’s something I hope to emulate with this blog.

Week One at McAfee:

There is one constant in this valley and that is…change.

Second day at McAfee, DeCesare and Gebhart are appointed co-presidents.

Appointing two McAfee veterans to co-presidents confirms Otellini’s commitment to preserve McAfee’s business model.

DeWalt transitions from President to non-employee member of the McAfee board…was it something I said?

Remember great leaders build even greater teams.

DeWalt’s transition will be tougher for McAfee than it will for McAfee partners.

Thurber confirms channels remains a top 5 priority at McAfee.

According to a CRN story on the McAfee changes, solution providers are applauding the McAfee channel program upgrades made in the past two years that have allowed partners to increase margins around accredited sales and services.

Interesting fact, in August 2011, Thurber will celebrate his two year anniversary at McAfee.

The Tweet of the week comes from MFEchannelchief (Alex Thurber): Lang, Doughnut Thursday at #McAfee is a wonderful thing until it leads to Fat Friday. Good tip.

I hope you found this blog easy to read and informative, and I encourage you to comment below. Also, feel free to follow me on Twitter.

After evaluating other players in this market, McAfee recognized that Sentrigo has the best technology, best go-to-market approach, and strongest team to bring into McAfee. McAfee has sold Sentrigo solutions under an OEM agreement and has had a successful partnership with Sentrigo through the McAfee Security Innovation Alliance. The Sentrigo solutions are complementary to what McAfee already sells and fit perfectly into our Security Connected approach.

Consistent with our strategy of protecting all layers of the computing stack from “silicon to satellite,” this acquisition enhances McAfee’s reach by providing key database security functionality for data center environments. We are continuing our aggressive advance into securing digital devices, networks, systems, the cloud, virtual environments and beyond.

I believe Sentrigo has the DNA to become the market leader for cloud security of databases. The Sentrigo architecture is unique in the database security market and gives McAfee the capabilities it needs to deliver the industry’s most comprehensive database security platform which is an important part of an organization’s overall data protection and data center security strategy.

An increase in the number of severe data breaches coupled with additional regulatory pressure is forcing an urgent and immediate expansion of the database security market.

I see this as a great opportunity for our customers, partners and for Sentrigo and McAfee.

Regards,

Dave DeWalt

These phases are closely related to my list of reasons why McAfee will benefit as part of Intel, which I wrote about earlier this week. We are already well on our way on these four synergy phases, the first of which we announced last month at the RSA Conference: a go to market partnership with Wind River, another Intel subsidiary.

McAfee will be working with as many device makers as we can, providing security for essentially any type of device that provides some type of connectivity. Wind River has over 2,000 partners in this space, many times more than McAfee.

The other synergy phases include further use of Intel channels by McAfee to grow our business. For example, Renée mentioned during the investor presentations that in Intel’s channel 30 percent of PCs ship without any kind of security.

We will also focus on the mobile device market and, as I mentioned, we are working on silicon-enabled security.

A bit more on mobile, McAfee has rapidly expanded in this space over the past year. We support virtually every major smartphone platform today with products for home users and businesses that allow users to locate, wipe, lock and encrypt devices to secure their personal data.

Mobile devices such as tablets and smartphones are increasingly vulnerable to attacks. These devices also pose ever greater data loss risks as the content on these devices has become very valuable and the capabilities continue to broaden.

As part of Intel we plan to expand our technology and work with Intel to grow in the mobile space.

Dave

This discussion may contain forward looking statements, including but not limited to, statements regarding the expected development and release of, and the expected timing of the release of, new McAfee products, expectations as to the opportunities and benefits resulting from Intel’s acquisition of McAfee, and the plans, strategies and objectives of management for future operations. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Additional information concerning these risks and uncertainties can be found in Intel’s most recent periodic reports filed with the U.S. Securities and Exchange Commission. Neither Intel nor McAfee assumes any obligation to update any forward-looking statements.

This was the first time since the acquisition of McAfee by Intel closed on February 28 that Renée and I had a chance to go on the road and talk about the acquisition. I am excited as Intel creates an unbelievable opportunity for McAfee and the combination of our companies promises great innovation in the area of cybersecurity. Together we intend to work to help people more securely take full advantage of the potential of computing and connectivity.

Over the past decade, cybercrime has gone mainstream with capitalism taking over in the cyberunderground and threats rising exponentially. McAfee Labs now identifies more than 55,000 unique pieces of malware a day. Add to that the growing number of devices connecting to the Net and the increasing use of online services and you have a perfect storm for cyberthreats. The problem is huge and today’s solution, frankly, isn’t sustainable.

During the trip to Boston and New York I explained to investors four reasons why we at McAfee are thrilled to be part of Intel:

1)      Intel is all about changing the world through innovation

2)      McAfee’s market reach can expand by 50 times through Intel and its channels and partnerships

3)      We have game-changing technology in the works, scheduled for release later this year, that changes the paradigm in how security is done, utilizing both software and silicon

4)      McAfee provides a management platform that can activate existing but underutilized features in silicon from the cloud or on premise

To lift a tip of the veil on the technology work we’re doing, I see a strong future for Intel and McAfee in combining the power of silicon and software. Intel has already created several technologies at a deeper level in the computing stack that security software can take advantage of to provide new levels of trust in computing. 

In addition, there are several capabilities already built into hardware such as Intel vPro and Intel Virtualization Technology that software can take advantage of. You can expect future releases of McAfee technology to take advantage of these capabilities and other capabilities.

Yes, Intel is known as a silicon company, a hardware company, and it remains that. However, as Renée told investors, Intel has evolved over the last decade. Intel is now a platform company with technologies that operate at different layers of the computing stack above the silicon.

“This has been a long term strategic point of view for us that we need to evolve from just the base silicon business, up through the platform, and then following onto what we would call complete solutions,” Renée said in Boston on Tuesday. “In the context of McAfee, that’s part of the longer-term vision.”

During the road show Renée also reiterated that security is “one of the pervasive vectors of technology across all of Intel’s sectors.” Intel has added security as a third pillar of what people demand from their experiences with personal computers and other connected devices.

In addition, Renée provided a reminder that all Intel security products will operate under the McAfee brand, including future acquisitions that will find a home in the McAfee subsidiary. She also reiterated that McAfee will continue developing and selling products and services under our own brand and operate as a wholly-owned subsidiary of the Intel Software and Services Group.

It was great to finally be able to get out and talk about the amazing potential of McAfee as part of Intel. I look forward to meeting many of you as we set out to change the world of security and will further elaborate in future blog postings.

Dave

This discussion may contain forward looking statements, including but not limited to, statements regarding the expected development and release of, and the expected timing of the release of, new McAfee products, expectations as to the opportunities and benefits resulting from Intel’s acquisition of McAfee, and the plans, strategies and objectives of management for future operations. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Additional information concerning these risks and uncertainties can be found in Intel’s most recent periodic reports filed with the U.S. Securities and Exchange Commission. Neither Intel nor McAfee assumes any obligation to update any forward-looking statements.

I want to confirm that it is business as usual for us and our relationship with you. We will operate as a wholly owned subsidiary of Intel with the same McAfee management team. Your channel managers, and the rest of the McAfee team that supports you in the field, will remain unchanged.

We are very excited about the opportunities that this acquisition represents. We will continue developing and selling our current security products, solutions, and services under our own brand and will retain our current channel strategy and programs. The channel remains a top priority for both Intel and McAfee, and we will invest our time and resources toward helping you grow your organization by improving our programs and fostering further engagement and enablement.

We’re looking forward to working with Intel to make an even bigger difference in everyone’s lives by expanding the scope of cybersecurity to adapt to a changing world. Thank you for your partnership and ongoing support of McAfee. Please feel free to contact me if you have any questions.

For McAfee customers, it’s business as usual and better.  McAfee maintains its own products, customers, and sales force and continues to develop, market, and sell products under the McAfee brand for multiple platforms and architectures.  McAfee will operate as a wholly-owned subsidiary of Intel, becoming part of Intel’s Software and Services Group.  We now add Intel’s global reach, world-renowned labs and researchers, and technology leadership to the world-class McAfee portfolio of security products, solutions, and services.  

This acquisition is the largest in Intel’s history and reflects Intel’s strategic elevation of security as a top global priority.  As many of you know, the McAfee vision of security extends from “silicon to satellite,” and we remain thoroughly focused on the breadth of that vision.  The deal will accelerate the development of more effective ways of providing security below the operating system by bringing security to silicon, and we continue our aggressive advance into securing digital devices, networks, systems, the cloud, and beyond.

We firmly believe this deal strengthens McAfee, especially our ability to serve you and our capacity to innovate and move our innovations to market to secure your digital assets.  I know many of you will have questions about McAfee becoming part of Intel and how this will affect you.  We would like to invite you to a special webinar in May that will focus on how Intel and McAfee are working together to enhance your security.  We also encourage you to participate in FOCUS 2011, McAfee’s annual user conference on October 18 – 20, 2011 where you can learn about the latest trends in security and how to maximize your security investment. 

We are personally committed to seeing this acquisition increase the value we bring to you, our customers as well as to our partners and the industry.  McAfee has been working with Intel for almost two years and will begin releasing the first fruits of that ongoing strategic partnership later this year.  We are extremely excited about the collaboration between Intel’s R&D team and the McAfee global team of security researchers and experts and eagerly anticipate their innovations and advances in security.

The security of the computing environment for businesses, governments, and families around the world is continually challenged to scale as billions of digital devices connect to the Internet amid a surge of cyber threats and malware.  A more trusted and secure computing environment – enabled by technologies and products from McAfee and Intel – will help ensure that online commerce and communication continue to flourish and the immense benefits of our connected world are realized.

Thank you for your ongoing support of McAfee.

Dave DeWalt
President
McAfee, Inc.

Renée James
Senior Vice President, Intel Corporation
Group General Manager, Software and Services Group
Chairman of McAfee Subsidiary

This discussion may contain forward looking statements, including but not limited to, statements regarding the expected benefits of the transaction and the plans, strategies and objectives of management for future operations.  These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements.  Additional information concerning these risks and uncertainties can be found in McAfee’s most recent periodic reports filed with the U.S. Securities and Exchange Commission. McAfee assumes no obligation to update any forward-looking statements.

Our CEO, Dave DeWalt sat down with Ben Iannotta, C4ISR Journal, as part of the publication’s “Interview” series to discuss Wikileaks, mobile devices and smart phones, as well as critical infrastructure protection. Additionally, Dave discussed our work in the defense space, where our host-based security solution is now on more than 5 million computing devices across the entire Department of Defense’s three networks. You can view the interview on C4ISR’s website, or catch it in this month’s print edition.

Although 2010 was an active year for cyber criminals, we at McAfee continued to provide solutions to help business and government keep their data secure.  As we enter the New Year, you can be sure that our continued commitment to provide innovative and effective protection will be one of our “resolutions.” Here’s to a safe, secure 2011!

As in Nevada, McAfee President and CEO Dave DeWalt and Worldwide CTO and Executive Vice President George Kurtz presented the company’s vision for securing the digital future. Breakout sessions delivered by partners and McAfee staff gave participants the latest news in the security field.

During the opening general session, PricewaterhouseCoopers presented its 2011 Global State of Information Security Survey, a worldwide study of more than 12,000 industry managers of IT and security.

To introduce his figures, PwC’s Philippe Trouchard explained that today’s threats are of an economic nature:

• From Aurora to Stuxnet, the targets are high-tech companies and industrial processes
• From the coders and exploiters caught during the FBI Trident Breach operation to Alberto Gonzalez, ring leader of the Heartland-Hannaford cases, banks and their customers are the victims

In these examples, the economic losses are estimated at tens to hundreds of millions of dollars. Their impact on business is rising.

Although the number of incidents appears to be declining, the costs to businesses has reached significant levels. From 2007 to 2010, financial losses and compromises to brands and reputations have increased as much as 233 percent.

The greatest compromises are to data. The number of respondents reporting data exploitation has increased by 69 percent since 2008. Mobile devices represent a significant new category of exploitation, with 20 percent of companies having suffered such incidents. But a cause for concern is that many companies do not have a global view of their security incidents:

In 2010, management has become more concerned with security than the technical staff. There has been a significant shift in the evolution of the chief information security officer’s (CISO’s) reporting channel. The security function is moving away from the CIO to the company’s senior decision makers:

Another cause for concern is the lack of reliable security procedures for one-third of companies:

Despite respondents expecting to see an increase in security budgets, 50 percent of companies had to delay or to reduce their security projects.

It’s no surprise that new technologies (social networking, wikis, blogs, etc.) represent one of the fastest emerging areas of risk.

In conclusion, Trouchard explained that during the 2007 to 2010 period the justification “client requirement” was the globally acknowledged leading driver of security spending (an increase of 21 percent) while all other justifications decreased:

This survey shows clearly that the information security function must operate as a business enabler, allowing companies to be more customer facing and helping them to innovate and expand.

Focus10 in Paris was an unqualified success. I spoke with many customers who eagerly await the 2011 event.

- Q3 revenue of $523 million, up eight percent year-over-year
- Q3 deferred revenue of $1.4 billion, up eight percent year-over-year
- Year to date operating cash flow of $431 million, up 23 percent year-over-year
- Q3 non-GAAP earnings per share of 67 cents, up 9 percent year over year

In Q3, our corporate business continued its strong growth with revenue of $324 million, a five percent increase year-over-year.  McAfee closed 525 deals greater than $100,000 in value – a record, including 33 deals greater than $1 million. 

Our consumer business also performed very well, reaching record revenue of $199 million for the third quarter, up 13% year over year.  Our OEM relationships continue to pay off and our direct online business had its eleventh consecutive quarter of double digit year-over-year growth.

McAfee’s strong performance in Q3 was in conjunction with what I believe is one of the most exciting developments in the company’s history. As you know, on August 19 we announced that McAfee has agreed to be acquired by Intel. I’m very excited about the expanded opportunities McAfee will have as part of the Intel family. This transaction fits perfectly with our vision of ubiquitous security and is expected to accelerate innovation at McAfee and ultimately make the digital world a safer place.

The proposed combination of Intel and McAfee will be about helping provide greater protection and efficiency to endpoint, mobile, and embedded devices by bringing software and silicon together to do the heavy lifting. We are not moving away from our core security business of software-based endpoint protection and network security technologies but instead intend to improve security for all customers by providing integrated hardware and software solutions.

There are three critical areas of focus:

1) Mobile and Embedded Device Security: Connected devices such as copiers, smart meters, medical devices and others require optimized protection with a lower memory footprint and low CPU utilization, such as whitelisting.

2) Security Moving Down the Stack: We expect the combination of software and silicon to create the next generation of security technology, following a path similar to the one virtualization technology has taken over the past decade. We will be able to utilize the silicon to enable the security software and provide better performance and higher efficacy.

3) Managing Security: With McAfee, Intel is acquiring ePolicy Orchestrator, the industry’s leading security management platform, which gives enterprises the capability to centrally manage security across a myriad of devices using a single console.

In addition, it is important to understand that McAfee will be a standalone, independent subsidiary of Intel and continue to operate without interruption and with autonomy. This means a continued focus on multi-platform and multi-device support. McAfee and Intel have been working together for some time already and we look forward to introducing the first products from our strategic partnership next year.

I am very proud of our accomplishments in Q3 and very excited about our future.  We continue to drive our growth with industry leading solutions, a world class workforce, and the strongest partner relationships in our history.

Dave

This discussion may contain forward looking statements, which include statements regarding McAfee’s preliminary results for the quarter ended September 30, 2010, the anticipated benefits from McAfee’s acquisition by Intel, the security market, the demand for and value of McAfee’s security solutions, and McAfee’s strategy, market leadership and positioning for continued market share gains.  These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements.  Additional information concerning these risks and uncertainties can be found in McAfee’s most recent periodic reports filed with the U.S. Securities and Exchange Commission. McAfee assumes no obligation to update any forward-looking statements.

Of course, I did not miss the keynotes sessions from our CEO Dave DeWalt and President Bill Clinton. Both were excellent: Our boss explained the “McAfee 3.0” strategy from silicon to satellite, and later former President Clinton pushed companies and governments for progress and change. Then my attraction for technical tracks led me to quit the splendid Venetian Ballroom for less shimmering meeting rooms. I particularly appreciated two talks.

One was given by my colleague Paula Greve, who presented a technical overview of emerging threats that are far more targeted and evasive: Threat Trends Across All Threat Vectors. She explained how innovations from McAfee Labs addresses them and translate into far more predictive protection, leaving by the roadside older reactive technologies. I particularly liked one of her example showing how we suspected a threat in May that resulted in an attack one month later.

Dmitri Alperovitch’s talk also grabbed my attention. Delivered as a cybercrime mystery in which our reputation engine helps unfold the story, this session defined what we mean by “reputation” and discussed the elements that go into calculating an entity’s reputation with confidence. He also discussed how correlated threat intelligence from a broad spectrum of telemetry data combined with the latest mathematical modeling leads to truly effective reputation scoring. Next Dmitri spoke about the scope of our reputation engine. It receives more than 100 billion queries each month:

• 2.5 billion malware reputation queries/month
• 20 billion email reputation queries/month
• 75 billion web reputation queries/month
• 2 billion IP reputation queries/month
• 300 million IPS attacks/month
• 100 million network connection reputation queries/month

I also presented in a session with McAfee Labs PR chief Dave Marcus. In our track, we spoke about cyberinsecurity: from cybercrime to cyberterrorism, including hacktivism and cyberwarfare. Let me go back over two points that we and several audience members discussed for about a half-hour after the end of our session.

The first question we debated was the definition or existence of cyberterrorism. To introduce it, we quoted the definition given by Keith Lourdeau in 2004: “Cyberterrorism is a criminal act perpetrated by the use of computers and telecommunications capabilities, resulting in violence, destruction, and/or disruption of services, where the intended purpose is to create fear by causing confusion and uncertainty within a given population, with the goal of influencing a government or population to conform to a particular political, social, or ideological agenda.”

Our goal was not to create any more sensationalism than already surrounds this subject. In the three Canadian cases we detailed that day (cases already covered in a blog I wrote in April,) the Internet was not directly used as a terror instrument. It was used for communication, propaganda, financing, and the preselection of targets. Until recently, the Internet and its endpoints were never approached or viewed as a target for any direct terrorism action in any real sense (for example, the disruption of interconnected devices involving loss of life). However, the recent Stuxnet example demonstrates that nothing is impossible.

The second topic that excited the audience was cyberwarfare. I think that most of us agree that in the future, the most sophisticated attacks as well as the most damaging will be the ones made by state-controlled or military attackers conducting destructive operations via the Internet. Here the Georgia incident cannot be overlooked after some Russian governmental sources dropped hints about their actions. These examples plus Stuxnet and Aurora lead us to conclude that the private sectors in democratic states can be considered as targets in the future.