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Intel Corp. is selling off controlling interest in LANDesk, its software division that develops applications to manage computer networks.
The software unit will be sold to LANDesk Acquisition Corp., an entity formed by two venture capital firms, Vector Capital of San Francisco and vSpring Capital of Salt Lake City, Intel said Wednesday.
Financial terms of the deal, which is expected to be completed by the end of the month, were not disclosed, but Intel said it will continue to hold a minority stake in the new company.
The move, part of Intels refocusing on its core business, is intended to allow the software organization to more aggressively pursue new opportunities in the management software space.
“I think its the right thing for them to do,” reacted Ronni Colville, research director for Gartner Inc. in Stamford, Conn. “As a chip manufacturer, they dont have as much of a compelling story to be a software distribution solution provider as a Novell or a Microsoft,” she added.
The 150 workers currently employed by Intel, in Santa Clara, Calif., will be offered the opportunity to continue working on LANDesk at the companys new headquarters, which will be based in Salt Lake City and headed by new CEO Joe Wang, former head of Symantecs enterprise software division.
“This is not Intel getting out of the business, but rather setting it up to be more successful,” declared Robert Naegle, director of market development for Intel in Salt Lake City. “Its been profitable, but its getting good financial backing to allow it to grow more aggressively. The business doesnt change,” he asserted.
“In the past where Intel took profit out of the business, well reinvest it back in and market it more aggressively,” echoed Wang in Portland, Ore. “Youll see more frequent new releases and well get into new areas,” he added.
Although the LANdesk desktop management suite has been around for several years, Wang doesnt characterize it as a mature product line. “There are a lot of things we could do that were not doing. Our focus will be in mid-sized companies with 500 to 5000 users. There arent a lot of tools available in the market to serve those (companies) well,” said Wang, who also sees the international market as an “untapped” area.
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Intel has pledged to help in the transition over the next three months to insure that customers are not affected by the change. The new company intends to use existing channels to market the software.
“The trick will be to sustain the channel partners they have in place. That will be a unique differentiator for them. Others dont have that global presence,” said Colville. At the same time, the new company will be challenged to maintain the “reasonable” pricing that Intel has created for the LANdesk product line, she believes. “Lets see if they can do that outside of Intel.”
The new company will pursue other opportunities not yet addressed in the product lineup, which includes LANDesk Management Suite, LANDesk Client Manager, LANDesk Server Manager, LANDesk Asset Service, Instant Support Suite, Mobile Manager and Remote Services. “The current product (suite) covers inventory, metering, alerting, policy management, software distribution and remote control. Wed like to extend its capabilities. The team knew they needed to do that, but couldnt,” said Wang. One possible functional extension to LANdesk management suite includes settings migration, which is now only addressed through a reseller relationship.
In the last 18 months, slumping sales and a slowdown in tech spending has spurred Intel to exit several businesses and focus more on making processors, its main source of revenue.
Among its more prominent moves, the chip maker closed its consumer products division, which made such items as digital cameras and mp3 music players, and announced a gradual shut down of its Web hosting business, for which it took a $100 million charge against in earnings last quarter.
On Thursday, Intel is scheduled to give a mid-quarter update in which it will indicate how sales are faring this quarter, with several Wall Street analysts predicting the chip maker will lower its earnings projections because of weaker than expected consumer PC spending.
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