As Richard has already pointed out in an earlier blog, Oracle acquired additional server virtualization technology today by purchasing Virtual Iron. This acquisition had long since been in the works and predicted not only by Burton Group, but by several other organizations too.
The big question on everyone's mind is: why? After acquiring Sun Microsystems earlier last month, one would think that Oracle has all the virtualization technology they need. Richard has already pointed out several reasons why Oracle made this move... including SMB customer acquisition, better management tools, and the ability to sell Oracle's new found virtualization technology as a standalone product. All good points...I'm sure these were on the top of Oracle's list. There is another potential reason -- to keep VirtualIron out of the hands of a potential competitior such as RedHat or Novell. In fact, Oracle may view VirtualIron as another item on their grocery list of companies to acquire that includes RedHat. By purchasing Virtual Iron, Oracle prevents RedHat from acquiring additional virtualization technology, perhaps in attempt to keep RH's price low for a future acquisition. It also prevents Novell from buying VirtualIron's technology, which uses Novell's SuSE Linux for it's services partition.
There are other implications too.
Oracle is now in an interesting position. For many IT technology companies, Oracle has moved from being a strategic partner, to a potential competitor. With the Sun acquisition, both server AND storage companies -- who once happily sold Oracle database solutions -- have to wonder if Oracle will compete by offering highly-tuned servers and storage for their data base technology. Microsoft and Oracle have been competing for a while, but these two acquisitions open a new competitive chapter in virtualization and operating systems. VMware too, realizes there is a new player with deeper pockets in the virtualization space.
But one can hardly blame Oracle. Increasing competition is a sign of the IT industry times. How long could Oracle grow revenues with a single flagship product that has captured a large portion of the market? Oracle is doing what well-managed companies do...return value to shareholders. Cisco reached the same conclusion earlier this year, and has since expanded into the server hardware market with the UCS announcement. Yes, it's an interesting time in the IT industry, there simply isn't enough market share to go around anymore. Competition among the bigger players was inevitable at some point.
[posted by: Drue Reeves]