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McAfee Lays Off 200, Sales Execs Depart

Verizon isn't the only big name in telecom and IT letting people go. Security giant McAfee cited the acceleration of its device-to-cloud cybersecurity strategy as a reason for the cuts. Read why one analyst says McAfee has "the appearance of treading water."

Edward Gately

January 25, 2019

4 Min Read
Job Personnel Cuts
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McAfee has laid off about 200 employees as the cybersecurity company executes on its device-to-cloud strategy.

McAfee has shed about 4 percent of its workforce in the past two weeks, The Information is reporting, citing several people familiar with the matter. It also said several senior sales executives, including Bill McAlister, senior vice president of sales for the Americas, have left the company.

“To accelerate our device-to-cloud cybersecurity strategy, McAfee is investing in growth areas and optimizing processes to put the customer at the core of everything we do,” a McAfee spokesperson said. “As we make changes, we are balancing the needs of the business with those of our workforce, approaching these decisions thoughtfully and with care for impacted employees.”

The company wouldn’t provide any further specifics.

This news didn’t come as a surprise to Eric Parizo, senior analyst of enterprise security with GlobalData.

You can keep up with the Channel Partners telecom and IT layoff tracker to see which companies are cutting jobs and how the channel is impacted.

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GlobalData’s Eric Parizo

“First, as was reported last month, TPG and Intel were said to be interested in selling McAfee, and were in talks with at least one suitor,” he said. “It has been less than two years since McAfee officially spun out of Intel to become a standalone company, and top McAfee executives have said the first six months were largely a wash because of the heavy lifting required to stand up the various organizations and systems (HR and IT first and foremost) needed to support a standalone organization. So it would seem strange that TPG and Intel would want to bail out so quickly.”

That lack of patience boils down to two things, Parizo said. One, by all accounts revenue has been well below McAfee’s internal projections, and “that’s why we’ve seen the departure of key figures in the sales and channel organizations in recent months,” including McAlister, Richard Steranka, vice president of global channels, and Gavin Struthers, APAC president, he said.

“Second, McAfee acquired Skyhigh Networks about a year ago for a price estimated to be north of $300 million,” he said. “For a company in McAfee’s position, that was a huge amount; the thinking was it would immediately create new revenue because McAfee could sell Skyhigh cloud access security broker (CASB) technology into the McAfee customer base, but it is believed that McAfee has struggled to do so. So with revenue falling short and the Skyhigh acquisition not meeting expectations, McAfee’s ownership is, in all likelihood, understandably frustrated, and with a big turnaround unlikely in the short term, perhaps looking for an exit.”

Parizo’s biggest concern with McAfee is in regard to its go-to-market approach. The company has adopted what it calls a “device-to-cloud” strategy in order to highlight what it sees as its strengths, namely its endpoint and cloud-security solutions, he said.

“However, it is ignoring the reality that securing the network, which obviously connects devices to the cloud, remains critically important,” he said. “Even though McAfee has solid network security technology, specifically its NSP intrusion prevention line and its often overlooked Network Threat Behavioral Analysis solution, it has chosen to pull back investments in those products, instead of investing in and highlighting them as …

… a key pillar in its solution platform. From a competitive standpoint, I think this is a mistake that is hurting McAfee.”

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Ovum’s Rik Turner

Rik Turner, principal analyst at Ovum, said McAfee has had the “appearance of treading water rather than surging ahead for a while now,” and while he’s not ready to write them off as yesterday’s news just yet, “the report card should probably read ‘Must Try Harder.’” It’s clear the entire cyber market, and particularly the endpoint and cloud parts of it, is “incredibly competitive, nay cutthroat, at the moment,” he said.

“We have been watching McAfee since it emerged back out of Intel to see whether it could return to its former glory in the tough market for cybersecurity products and services,” he said. “It is clearly focused on being a major player in endpoint security, where it has a longstanding position, but faces a whole bevy of new competitors, as well as cloud (hence the SkyHigh acquisition), but opted out of network security when it sold off its next-generation firewall (NGFW) business to Forcepoint. It was, for many years, the No. 2 in the security market by revenue, directly behind Symantec, but now appears to have been overtaken in that spot by Cisco, even though the latter is not a pure-play security vendor.”

McAfee CEO Chris Young has often said he wants the company to be in the top two of all the markets it competes in, which helped explain its exit from NGFW, but it still has security information and event management (SIEM), even though it is not a market leader in that segment, Turner said. That, however, might be because it hopes it will underpin a bigger play in the evolving security-management market, as evidenced by its DXL/OpenDXL platform offering, he said.

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About the Author(s)

Edward Gately

Senior News Editor, Channel Futures

As news editor, Edward Gately covers cybersecurity, new channel programs and program changes, M&A and other IT channel trends. Prior to Informa, he spent 26 years as a newspaper journalist in Texas, Louisiana and Arizona.

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