With little to no success in pushing its own virtualization product, Oracle is in talks to acquire Virtual Iron, according to insiders at the startup.
Oracle Corp. has signed a letter of intent to acquire Virtual Iron Software Inc. and is said to be at the "checking-into-how-things-are-run stage," according to our source, who requested anonymity.
Virtual Iron claims to have around 2,000 small and medium-sized business customers, but it's "very much an also-ran in this market," according to Gordon Haff, principal analyst at Illuminata Inc. "They might be the fifth largest virtualization player, but that's like being a fourth-string quarterback," he said. They'll pay "whatever Larry Ellison has lying around in his sock drawer," he added.
Haff said Oracle would most likely buy Virtual Iron to beef up management tools for its virtualization technology, Oracle VM. Both companies' products are based on the open source Xen hypervisor. In addition Virtual Iron has a tool called LivePower that measures server power consumption. The tool can spot spare CPU capacity and "live-migrate" VMs on that server to another machine, allowing administrators to shut down servers that are not being used.
From a partner perspective Oracle's traditional position has always been that it will not support third-party software in its stack. That meant it would push back when customers reported problems running Oracle software in VMware environments.
Instead, Oracle came up with its own virtualization, which, industry insiders agree, is not up to VMware standards. Adding Virtual Iron's management console and live migration technology to Oracle VM is an improvement, but still a long way off from VMware.
The truth is Oracle wants to own more of the customer's implementation and not see that money flow to other software vendors, said Scott Jenkins, president of the EBS Group, an Oracle partner in Kansas City, Kan. "This is just what they did in backup with Veritas, which used to do huge business in Oracle accounts and Oracle just had to bend over and take it. But ultimately, Oracle bundled its own backup into Oracle Enterprise editions. Now it's doing the same in virtualization," Jenkins said.
From Oracle's point of view, VMware adds another layer of complexity and variables to be supported. It insists users prove that their Oracle implementation runs well natively before Oracle will resolve problems running on VMware. So, for Oracle shops keen on buying everything from Oracle, this deal makes sense.
A spokesperson for Oracle said the company declines to comment on rumors and speculation.