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McAfee Brings Smartphone Security Chops to Intel

McAfee recently acquired two companies that develop smartphone security software for enterprise customers.
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(INTC) - Get Intel Corporation Report

recently announced that it was acquiring



for $7.68 billion in cash. McAfee competes with


(SYMC) - Get Symantec Corporation Report

, CA Technologies, AVG, TrendMicro and Kaspersky Labs in the antivirus software market.

McAfee recently acquired two companies -- TrustDigital and WaveSecure -- that develop smartphone security software for enterprise customers. These acquisitions should help Intel tap the fast-growing smartphone security market. Our analysis follows below.

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Bullish outlook for smartphone security software

We expect smartphone security software to be an increasingly important market going forward, particularly for enterprise customers. Over the next decade, global smartphone sales are expected to grow much faster than PC sales.

The smartphone installed base was around 700 million in 2009, compared to an installed base of 1.1 billion PCs. If current trends persist, the smartphone installed base could exceed the PC installed base by 2020.

Security software for businesses constitutes around 34% of the $32 Trefis price estimate for McAfee's stock. (The stock closed at $57.01 Thursday afternoon, after the Intel announcement.) McAfee's share of this market increased from 11.2% in 2006 to 14.7% in 2009.

Excluding the TrustDigital and WaveSecure acquisitions, we expect McAfee's share of the enterprise security software market to reach 15.4% by the end of the Trefis forecast period. These acquisitions give McAfee access to the substantial smartphone security market. As a result we see potential for its share of the overall enterprise security market to reach 20%, rather than the 15% that we currently forecast.

You can drag the trend-line in the chart below to create your own enterprise security market share estimate for McAfee and see how it impacts the company's stock price.

Trust Digital

In June 2010, McAfee acquired Trust Digital for an undisclosed amount. Trust Digital security software works with a broad range of mobile operating systems, including iPhone OS, Android, WebOS, Windows Mobile and Symbian. It claims to provide protection against viruses, spyware and spam.


In July 2010, McAfee acquired WaveSecure, a set of tools to safeguard smartphones in case of loss or theft. WaveSecure can locate a missing mobile device, lock the smartphone to prevent unauthorized use or access to data, and remotely wipe all data from the device.

You can see

the complete $32 Trefis price estimate for McAfee's stock here.


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