I've been waiting for quite a while for a major security firm to be purchased by one of the big boys. I am glad that Intel was the first one to start this trend, because they are generally only a hardware player. If security were embedded at that level it would create a differentiator from other competitors, weather they are x64 based or other chips (Oracle, IBM). Security has become very commoditized and consolidated over the last several years.
You haven't seen much innovation in several years either. Is that because we've solved the problem? I think not… Is that because there isn't capital in this market? Nope… I think the main reason is due to the massive consolidation and the work needed to integrate all of these smaller companies together. You are also seeing players like Microsoft developing a larger security portfolio, as well as network vendors integrating more security features and products into their appliances. If you look back 5 years ago, there wasn't much as far at UTM (Unified Threat Management) devices, now every firewall vendor has one, you can find hundreds of products both commercial and open source in this area.
Some other thoughts on how security is being embedded across the stack are by Bruce Schneier, who is a superb writer and author as well as a great cryptographer.