Intel (NASDAQ:INTC) spent $880 million on embedded systems specialist Wind River in 2009. Two years later, the chip giant picked up security software veteran McAfee for another $7.7 billion.

This multibillion-dollar buyout binge didn't make much sense at the time. But behind the scenes, Intel had a plan. The company recently presented a brand-new Internet of Things platform that might justify those princely buyout sums -- and then some.

Intel's Internet of Things model

Intel's vision of how the Internet of Things works, and where the company fits in. Click on the graphic for a bigger version. Source: Intel.

As Intel's handy infographic above shows, the Internet of Things consists of several connected parts. There are devices collecting data in the field, systems that store and manage the information flow, and number-crunching servers or workstations where you extract business decisions or personal benefits from the whole process. In many cases, the information flows both ways, and everything is networked together into a larger system.

At least two of these process blocks -- data collection and management/storage -- are often exposed to the wide-open Internet. That crucial ability to gather data from anywhere and analyze it with tools that would never fit in a wristwatch is what gives the Internet of Things much of its power.

The very same exposure to the ever-present, globe-spanning Internet is also this system's weakest link. At every open connection point, in and out of the Internet of Things modules, hackers might read, delete, or even modify data.

That's where Intel's Internet of Things strategy comes into play.

What is this platform good for?
First, by creating an official platform that ties all of these free-floating pieces together, Intel can sell its customers a top-to-bottom solution in which every piece has been designed and tested together. A holistic view of the entire system can give Intel a better grip on security and performance issues, enabling it to address them in-house rather than notifying another company with a vague hope that the issue might be dealt with somewhere.

McAfee's security expertise obviously comes into play here. Now renamed Intel Security, the division gets an end-to-end view of potential security holes in the IoT platform. The security factor alone could make Intel a major player in Internet of Things installations, and it couldn't have happened without the big, crazy McAfee acquisition.

If all of this sounds a bit too complicated to work in the real world, that would be where Wind River gets to show its stuff.

Introduced as a "key element" of Intel's Internet of Things platform, Wind River's Edge Management System sits at the edge of the public Internet cloud to manage and configure everything that is going on. It's a turnkey system that ties the data-gathering process together, and connects it securely to the more private storage step.

Of course, all of these products face intense competition from industry peers. Intel's platform isn't even the first of its kind. For example:

  • Oracle (NYSE:ORCL) claims that its Java-based solution is the only alternative providing "an integrated, secure, comprehensive platform for the entire IoT architecture across all vertical markets."
  • Cisco Systems (NASDAQ:CSCO) prefers to think of this market as "The Internet of Everything," which will "connect the unconnected." Rather than building a whole new set of products for this market, Cisco prefers to repackage the products and services already available under the IoE banner.
  • Microsoft (NASDAQ:MSFT) built its Internet of Things portfolio around the Windows Azure cloud computing service. Marketing this service under the catchy "Internet of Your Things" slogan, Microsoft presents the bewildering array of IoT solutions already available, then claims to be the "trusted vendor" you need to make sense of it all.

That being said, Intel's platform appears to stand alone in offering both hardware and software specifically designed for the Internet of Things. The embedded smarts of Wind River and the security muscle of McAfee most certainly helped Intel complete this attractive package. Now it's up to the Intel mothership to market and exploit this platform effectively over the next few years.

Remember, Intel is fighting for a slice of the largest pie you've ever seen. Cisco estimates the Internet of Things will add more than $19 trillion of economic activity before 2022, and I haven't seen anyone dismantle that audacious claim. This is the time to stake out a claim on the exploding IoT markets, so you can reap the rewards of a market-leading position later on.

And that's exactly what Intel is doing with its new Internet of Things platform. It all makes sense now.