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#5 Newsmaker: Ross Allen of McAfee

After years of quiet, steady growth in Canada, a pending acquisition by chipmaker Intel has people talking about McAfee again

For several years, Ross Allen has been quietly but steadily growing McAfee Inc.‘s (NYSE: MFE) sales and channel presence in Canada as the Canadian general manager. In 2010 though, the security vendor burst onto the front pages with the announcement in August that chipmaker Intel Corp. was acquiring McAfee for US$7.7 billion.

It was a deal that certainly no one saw coming, and one that it took many customers and partners some time to wrap their minds around.

Intel said the acquisition reflects that security is now a fundamental component of online computing. Intel wants to bring computing security down to the chipset level, calling it “hardware-enhanced security,” and Intel will make security a strategic priority for the company alongside performance and energy-efficiency. Once the deal closes in the first quarter of 2011, Intel indicates McAfee will operate as a wholly-owned subsidiary of Intel, reporting into Intel’s Software and Services Group.

McAfee CEO Dave DeWalt told CDN that Intel has really changed a lot in recent years in the way it develops silicon. It was all about getting more and more performance, following Moore’s Law. Then over the last decade it became more about getting increased power from the processors. After building the company on those two pillars in recent years, DeWalt said Intel is now set to add security as its third pillar, on the same level as performance and power.

He added he’s been surprised to learn about the intelligence Intel has already added to the silicon, such as its vPro and Active Management technology. Buying McAfee isn’t about adding to the silicon further though, said DeWalt.

“It’s about integrating and leveraging the features already existing in the silicon today,” said DeWalt, and better marrying the silicon hardware from Intel with McAfee’s security software. “This becomes a very powerful model for us, and can bring a lot of solutions and products to the market.”

It’s expected to be business as usual for McAfee’s channel partners said James Alexander, senior vice-president with London, Ont.-based InfoTech Research Group. There will be very little overlap, with McAfee’s channel tilted toward the reseller and solution provider side, and Intel’s weighted toward the original equipment manufacturer and system builder community. But going forward, he said with access to Intel’s research and development resources, and greater fiscal capacity, we could see McAfee partners offered new innovative solutions to bring to market.

A former senior Intel executive confirmed McAfee has been on Intel’s radar for some time. Pat Gelsinger, now president and COO of Information Infrastructure Products at EMC Corp., said he was surprised by the timing of the McAfee deal but not by its logic.

“We had looked at security and security deals for a long time … with the basic thesis of securing the base platform,” Gelsinger said.

Security requires building a “root of trust” across all parts of a system to establish that someone is who they represent themselves to be, Gelsinger said. It’s impossible to trust the operating system, drivers, firmware or BIOS of a PC or server because all those can be hacked, he said. Recent security incidents have proved that antivirus software and firewalls “don’t work,” leading to a demand for deeper security, Gelsinger said. “You come to the simple answer that silicon-based root of trust is important.”

On the channel front, McAfee and channel chief Alex Thurber launched several initiatives in 2010. In the ever popular area of cloud computing, McAfee announced a program for software-as-a-service (SaaS) providers to add additional security to their cloud deployments.

Branded as the McAfee Cloud Secure program, it includes Cloud Security Certification Services, Automated Auditing, Remediation & Reporting, and a Security Credibility trustmark. Amazon Web Services and SuccessFactors were amongst the first providers to leverage the new program.

If the cloud was king on the technology side, on the program side it was about partner margins and profitability with a revamp of the worldwide partner program. The margin advantage area of the program includes a number of sales incentive programs that partners can use to better predict margin payout. Those channel partners who invest in accredited sales and technical resources from McAfee for example will be able to differentiate themselves from others and increase their margins.

Deal protection and incumbency protection are the only two new margin advantage programs for Canada. The McAfee Deal Protection policy states that if an opportunity has been approved as a deal registration or if an approved applicable teaming plan is in place with a McAfee partner, quote exceptions or special pricing will only be offered to the original McAfee partner. In effect, this offers Deal Protection for the authorized partner for this target opportunity. Similarly, Incumbency Advantage provides a registration option that will provide additional margin to the reseller that closed the original business.

Going into 2011, McAfee is putting its channel focus on the small and medium-sized enterprise space.

The initiatives will include an SMB partner acceleration initiative designed to increase partners’ sales of McAfee security solutions in conjunction with increased services attach rates. It will include the launch of a partner portal, called the McAfee Partner Acceleration Center, with SMB-specific sales and marketing tools and resources to help partners become trusted security advisors to their customers.

A Flexible Delivery Model Initiative will also be rolled-out by McAfee in 2011, including two new partner programs designed to provide SMB customers with more choice around service delivery: managed services and the cloud. Partners will be able to qualify for a SaaS designation that will help them differentiate themselves in the market, and will include tools and resources specific to the delivery models. There will be programs for both Managed Services Provider and Outsourced Service Provider partner types.

Finally, McAfee will also be launching an Emerging Technology program, designed to help it bring new technologies to market faster.

McAfee will work with select invited partners positioned to bring an emerging technology to market right away in a specific area of expertise, such as cloud services, providing profitability and enablement support. As the technology matures, it will be rolled-out to the wider partner base.