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By | Chris Mellor 9th March 2009 03:32

Oracle reaches for Virtual Iron

Virtualisation platform bulk-up

Speculation is growing that Oracle is close to acquiring Virtual Iron.

Virtual Iron is a server virtualisation vendor startup for small and medium enterprises. It uses the Xen hypervisor, providing equivalent functionality to VMware bit at lower cost. It is generally reckoned to be number five in the server virtualisation market, behind VMware, Xen, Microsoft, and Red Hat. The company, under CEO Ed Walsh, is venture capital-funded, and $20m was pumped in as a fifth funding round in January by investors led by Highland Capital Partners.

VI, which has more than 2,000 customers, recently announced Extended Enterprise Edition 4.5 featuring a virtual network switch with no physical adapters, better scalability, role-based access control, and a Windows 2008-supported management platform.

It appears that Oracle has signed a letter of intent to purchase the company. That seems curious as Oracle already has a virtualisation technology, called Oracle VM, also based on the open source Xen platfiorm, which it describes as "server virtualization software that fully supports both Oracle and non-Oracle applications, and is three times more efficient than other server virtualization products."

An Oracle FAQ (pdf) states: "With Oracle VM, Oracle now provides customers integrated clustering, virtualization, storage, and management for Grid Computing, as well as unified, full stack support for virtualization, Linux, database, middleware, and application products."

(here, here and here)

Why does Oracle need the somewhat rusty Virtual Iron business? Management tools, particularly those focussed on detecting and stopping under-utilised servers, and virtual machine migration facilities have been suggested as one reason.

A traditional Oracle strategy is to lower the overall costs of systems running its software, the database and the applications, by taking advantage of commodity hardware and open source software. By taking advantage of the price erosion such things cause compared to proprietary HW and SW, Oracle can resist price erosion of its own products by masking their expense inside a cheap server HW/system SW container.

Buying Virtual Iron would enable Oracle to increase the capabilities of Oracle VM and help persuade its customers not to go the VMware, Xen, Microsoft, or Red Hat routes for server virtualisation in Oracle environments.

Virtual Iron's total funding is $65m, and as a somewhat distant follower in the virtualisation market, with VMware leading the market and Microsoft about to get a huge chunk with Hyper-V, its prospects are not actually that great. This suggests that not much of a price premium, if any, will be needed for the investors to take the money and run.

For more on the Oracle-Virtual Iron pas de deux, see here, here, and here. ®

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