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    Oracle’s Virtual Iron Buyout Will Provide Essential VM Tool Set

    By
    CHRIS PREIMESBERGER
    -
    May 13, 2009
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      Oracle, a company with its own permanent mergers and acquisitions office, is adding an important ingredient to its product catalog in a quest to become the newest all-purpose IT systems company: a new-generation tool box that will administer both Windows and Linux virtualization deployments.
      When it closes a deal to acquire Virtual Iron announced May 13, Oracle will join EMC (owner of VMware), Microsoft (Hyper-V), Citrix Systems (XenServer) and Sun Microsystems (Sun Containers, xVM Ops Center and VirtualBox software) as one of the only IT systems providers that own server virtualization products.
      After the summer of 2009, that number of companies will shrink by one, because Sun also will have become property of Oracle in the widely reported $7.4 billion acquisition deal announced April 20.
      VMware products are installed on about 85 percent of all enterprise IT systems, with the others all claiming much smaller pieces of the virtualization pie.
      Oracle has a number of reasons to want to own a mature virtualization tool set.
      First, to become the full-service IT infrastructure company it envisions, it needs more control of virtualized software and hardware for all its deployments. Oracle doesn’t want to keep paying a “virtualization tax” to third-party providers like VMware or any other company.
      Secondly, Oracle needs a more complete set of tools for its home-developed Xen-based hypervisor, Oracle VM. It’s not an accident that Virtual Iron’s platform also is Xen-based, built on open-source code. Oracle’s virtual machine controls currently do not have management features as good as Virtual Iron’s LivePower, which offers much greater control of server power consumption. So the acquisition also is a green IT move for Oracle.
      Oracle intends to bundle Virtual Iron’s tools with its own VM layer to give users a full-stack management console for both virtual and physical systems. Virtual Iron also features better capacity utilization and virtual server configuration tools than Oracle offers today.

      Few Independent Virtualization Companies Survive

      With Virtual Iron leaving the ranks of providers of independent virtualization options, only a small number of them remain in the market, including Parallels, Debian’s OpenVZ and Ubuntu Linux.
      “Market consolidation seems to be upon us,” Galen Schreck, an analyst with Forrester Research, told eWEEK. “Plus, Citrix’s move to give away a full-featured version of XenServer makes it pretty hard to charge for this kind of functionality.
      “What’s a company like Virtual Iron to do? Both are Xen-based, and have pretty similar capabilities. Sure, Citrix charges extra for its most advanced management, but you get a lot of functionality for no money whatsoever. Meanwhile, VMware is the clear market leader with Microsoft being the next most popular platform in a distant second place.”
      Virtual Iron aimed its wares mostly at the small and midsize business markets. Is Oracle making a play for the smaller markets with this acquisition?
      “I don’t think this acquisition is about smaller markets-it’s more of an upgrade to the management capabilities of Oracle’s own Xen-based hypervisor,” Schreck said. “They get a better UI [user interface] as well as dynamic workload management and power management.”
      Schreck said it is still unclear how Oracle will handle the integration of both Sun and Virtual Iron into its catalog.
      “There is definitely some overlap here,” Schreck said. “Neither product has a lot of customers, so it’s not a question of which has more market traction. Sun’s xVM Ops Center is a nice product, but Virtual Iron is more Windows-friendly-which gives Oracle immediate access to the largest virtualization market.”
      ‘Interesting dynamic’ with VMware
      The Virtual Iron acquisition creates an interesting competitive dynamic with VMware, Zeus Kerravala of The Yankee Group told eWEEK.
      “They’re not the best of partners, but they do some work together,” Kerravala said. “As for Sun, it [Virtual Iron] is a parallel offering. Oracle didn’t have any way to virtualize Windows or Linux environments.”
      Katherine Egbert, an analyst with Jefferies & Co., said she believes the acquisition is a clear sign that Oracle wants to move deeper into the midmarket, a place it has hardly penetrated in the past.
      “It is a midmarket play. Virtual Iron has lot of government and education [customers] in their installed base,” Egbert said. “Oracle gets the full stack now, everything from the bare-metal hypervisor up to the highest-level user application.”

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