Intel acquires Neocleus – UPDATED

Posted by Staff   |   Friday, September 3rd, 2010   |  

Intel is definitively building something. The chipmaker is shopping, and shopping quickly, in the software market with a primary focus on security. At least for now.

Just a couple of weeks ago the company announced the acquisition of the security giant McAfee for $7.68B in cash. Now it acquires the virtualization startup Neocleus.
The news is not official yet, but Neocleus posted the news on its corporate blog a few hours ago, which Intel immediately required to remove, has learned.

Neocleus launched in May 2008, entering the virtualization market with an ambitious plan to leverage a client hypervisor for security purposes. Their product, based on Xen, has been one of the first on the market, along with the Virtual Computer NxTop.
The company, funded by Battery Ventures and Gemini Israel for $16.4M in two rounds, has been under the radar for most of its time.

Neocleus go-to-market strategy changed over the last two years, as their product failed to get any serious traction: in early 2010 the company released a version of its TrustedEdge platform called NeoSphere that could be OEM’ed and extended by PC lifecycle management (PCLM), security and help desk vendors. The first company to adopt it, in March, has been BigFix.

There’s no confirmation about the price that Intel paid for Neocleus but several sources suggest that it’s probably quite small as the startup was nearly out of cash.

Whatever the price is, the move leads to at least two interesting considerations:

  1. In January 2009 Intel and Citrix announced a pretty strong partnership on XenClient, the client hypervisor that will be released at the end of this month.
    It’s not clear yet what Intel plans to do with McAfee and Neocleus, but it may imply a change in the relationship with Citrix.
    In May Citrix announced a two-phases partnership with McAfee on XenClient, so even this alliance may be impacted.
  2. Right now on the market there are only three vendors working on client hypervisors: Virtual Computer which already ships NxTop, Citrix which is about to ship XenClient, and MokaFive, which just previewed its new platform at VMworld and that would probably ship later this year.
    Citrix has no direct control on Virtual Computer but it’s one of its investors, so it has a sort of option on any potential acquisition, and MokaFive has yet to deliver and build a credibility as client hypervisor vendor.
    Because of this, and because VMware is far behind in delivering its own answer, Client Virtualization Platform (CVP), MokaFive may become a highly desirable acquisition target.

The Virtualization Industry Radar has been updated accordingly.

The Israeli publication Globes reported that Intel spent just “a few hundred thousand dollars”.
The news site also reports that Neocleus raised $22M and not $16.4M as reported above.

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