Intel’s WhatsApp Moment: Doubles Down On Data Center Strategy With Altera

Intel isn’t a company known for being a spendthrift. It’s acquisition strategy tends to be more like Apple’s, surgical buys and acqui-hires to fill defined technology gaps. Unlike HP, Intel, isn’t known for spending big money on new markets. That history is one reason Intel’s $16.7 billion buyout of Altera, more than twice the size of Intel’s next largest deal ($7.6B for McAfee that also went against the grain in its size and market) is so significant. The deal is quite strategic since Altera technology is a great fit with Intel’s rapidly growing data center business unit. Whether Altera is worth the heavy price is debatable, but in this deal, Intel takes a page from Facebook’s playbook, specifically the WhatsApp and Oculus acquisitions, by making a big bet on the future that is based more on vision and faith than products and financials.

It’s very hard to justify the Altera deal based on the numbers. I explain why and walk through the strategic reasons Intel is interested in a flat-lined FPGA company in the rest of the column.