McAfee's Wi-Fi Security Play

Microsoft (Nasdaq: MSFT) has had a history of crushing the competition. Examples of its prey include WordPerfect, Novell, and even IBM (during the mid-1990s). But lately, the Microsoft threat has been losing its luster.

Look at Internet search. Despite huge investments, Microsoft cannot seem to get much traction against Yahoo! and Google.

There's another important area that Microsoft is targeting: antirvirus solutions. And, once again, Microsoft has been woefully behind in this category. It would seem that Microsoft, which has control of most operating systems, would have a significant advantage in providing superb antivirus capabilities. Right?

Not exactly. McAfee (NYSE: MFE) -- a key player in the antivirus market -- does not appear to be afraid of Microsoft. If anything, it's seeking ways to enhance its market position. Yesterday, McAfee announced that it is purchasing Wireless Security Corp., a privately held company. The terms of the deal were not disclosed.

Essentially, Wireless Security focuses on security solutions for Wi-Fi networks. After all, since Wi-Fi transmits data via radio waves, it is completely vulnerable to hacks.

McAfee and Wireless Security already have a partnership. But the acquisition allows McAfee to provide more extensive integration with its own product line. And, of course, it can sell its solutions through its global distribution channels. For example, McAfee has distribution deals with companies such as Time-Warner's AOL (NYSE: TWX) and Dell (Nasdaq: DELL). What's more, this fall, McAfee expects to launch a consumer product based on Wireless Security's solutions.

To remain competitive -- and provide new products for its customer base -- having wireless security solutions is critical for McAfee. While the Wi-Fi security market is small, it is expected to exhibit strong growth. IDC -- an IT research and consulting firm -- projects a 36% compound annual growth rate in the adoption of wireless access points over the next four years.

Furthermore, a McAfee study indicates 47.9% of opt-in wireless networks are unprotected. In many cases, wireless users participating in the study were not even aware that the networks were unsecured.

It's certainly scary stuff. But, it sounds to me like it may be a golden opportunity for McAfee.

Both Time-Warner and Dell are Motley Fool Stock Advisor recommendations.

Fool contributor Tom Taulli does not own shares of any company mentioned in this article.