This morning, Oracle announced its intent to purchase Virtual Iron with the acquisition expecting to close this summer. I had blogged about this just over two months ago when some rumors had hit the street of a possible acquisition by Oracle and what that would mean. So let’s recap what this means:
1. First and foremost, if Oracle keeps the Virtual Iron product in tact plus its distribution channel, this will signal a move down market for Oracle. Virtual Iron is a channel only product targeted at the small to medium enterprise market. This is a market dominated by the likes of Microsoft and not Oracle. Virtual Iron had done very well in this market until Microsoft launched Hyper-v at which time Virtual Iron’s market began.
2. The move gives Oracle’s virtualization management tools a shot in the arm. As I had mentioned in my earlier blog, Virtual Iron meets 83% of Burton Group’s required criteria for production worthy hypervisors. The big missing piece for Virtual Iron was enterprise level support and support lifecycle – easily filled by Oracle.
3. This gives Oracle a virtual machine management product not requiring their Enterprise Manager. The biggest advantage is the ability to sell virtualization stand-alone.
4. What does this mean for Novell? Virtual Iron depends heavily on SLES 10 for its services partition. The only answer I can see is that long term, this will get swapped out for Oracle Enterprise Linux (OEL) bits. Still, how this plays out is in Novell’s hands. Will Novell aggressively partner with Oracle? Historically, Novell has not done so.
Let’s watch the first point above. I believe this will be the hardest for Oracle to preserve, if they even intend on preserving Virtual Iron’s channel into the small to medium enterprise. It is an opportunity for them to compete more with Microsoft down market, but it will require some additional pricing and product changes including pushing OVM into the down market channel without the rich management capabilities as the “starter pack” or free version to compete against Hyper-V, VMware ESX and Citrix XenServer 5 – all of which are free.
As the merger completes, we expect to see more clearly how the products will end up being positioned in the channel.
[Posted by: Richard Jones]