Oracle May Grab Virtual Iron for Virtualization Development

Oracle is apparently in the hunt for another acquisition, and this time the database giant may have its eyes set on Virtual Iron Software, a company that specializes in low-cost virtualization products for small and midsize businesses as well as enterprises.

A possible deal between Oracle and Virtual Iron has been the subject of intense Web interest for a number of days. Speculation began after a research report written by Katherine Egbert, an analyst with Jefferies & Co., in which she said, "We think it's likely Oracle [will beef] up its server virtualization [management] capabilities soon via the purchase of Virtual Iron."

Egbert added in the report, "Multiple industry sources seem to indicate that Oracle will soon improve its server virtualization management capabilities by purchasing privately held Virtual Iron."

Virtual Iron, which was started in 2003, offers server virtualization software for SMBs and has tried to compete against the likes of VMware, Citrix Systems and even Microsoft by offering the technology at a lower price point.

According to The Register and other sources, Oracle has signed a letter of intent to purchase the company. Neither Oracle nor Virtual Iron has commented on these rumors or on any possible acquisition.

Oracle's first acquisition of 2009 was mValent, a small company that offered configuration management solutions. Oracle acquired 11 companies in 2008.

Although Virtual Iron remains a minor player in the virtualization market, with 2,000 customers and market share well behind that of Red Hat, Microsoft, VMware and other players, its assets would be of some use to Oracle. Like Oracle, Virtual Iron makes use of the open-source Xen hypervisor, and it has developed management tools that could potentially strengthen Oracle VM.

In those circumstances, customers could potentially be swayed to use the Oracle VM in order to virtualize within the Oracle ecosystem, as opposed to using products from VMware or other players.

"Oracle is trying to be more of a systems management player, more self-contained and able to run their own platform," Galen Schreck, an analyst with Forrester, said in an interview. "Virtual Iron doesn't have any meaningful market share, so the No. 1 reason I would buy them would be its [tools]."

Reports state that Virtual Iron's funding currently stands at $65 million. One of its applications is LivePower, a feature enabled by the company's virtualization infrastructure that powers down underutilized servers in order to save power.

When Citrix bought XenSource in 2007 for $500 million, it was believed that Virtual Iron was the other virtualization company Citrix had been looking at during that time.